• Mexican Peso rises after strong US Nonfarm Payrolls data for September crushed estimates.
• Mexico’s data showed an uptick in unemployment, while Automobile Exports and Production increased in September.
• US Unemployment Rate edged lower, easing recession fears.
• The Federal Reserve is expected to cut rates by 25 bps in the coming meetings.

The Mexican Peso appreciated against the US Dollar on Friday, sponsored by an outstanding jobs report in the United States (US) that set aside recessionary fears in the largest economy in the world. Meanwhile, market participants seem confident that President Claudia Sheinbaum’s government could be “market-friendly” despite backing controversial measures that could threaten the state of law. The USD/MXN trades at 19.17, down 0.83%.

Sentiment improved as Wall Street rallied after US Nonfarm Payrolls data for September, which crushed estimates and upward revised July and August figures. Consequently, the Unemployment Rate edged lower, a relief for the Federal Reserve, which slashed rates by 50 basis points at the September meeting, due to risks on the employment mandate, tilted to the upside.

This boosted the Greenback against most G8 FX peers but still not against the Peso. The Mexican currency is set to finish the week with gains of over 2%.

Furthermore, traders trimmed the chances of a 50 bps Fed rate cut in November, and they estimate 25 bps in the subsequent four meetings. Bank of America changed its November Fed call from a 50 to 25 bps cut.

Chicago Fed President Austan Goolsbee, not a voter in 2024 but one of the most dovish members at the Federal Open Market Committee (FOMC), said that more reports like this “will make me more confident we are settling in at full employment.”  He said most Fed officials expect rates to decrease over the next 18 months.