Moderate Economic Surge in Mexico Fails to Support the Peso
October 30, 2024 (Investorideas.com Newswire) Investorideas.com (www.investorideas.com), a go-to platform for big investing ideas releases market commentary from Quasar Elizundia,Expert Research Strategist at Pepperstone.
"Mexico's economy registered its highest quarterly growth rate since the second quarter of 2023 during the third quarter of 2024, with a 1% increase. This result surpassed market expectations and represents a significant recovery after several quarters of nearly stagnant growth, averaging less than 0.1%. All economic activities contributed to this improvement, with primary activities growing by 4.6%.
However, despite these positive results, the Mexican peso has not achieved favorable performance against the U.S. dollar. This is due to various factors, including the release of U.S. growth data, which, although slightly below expectations (2.8% vs. 3%), showed a robust consumer spending rate, the highest since early 2023, which has been well-received by investors, strengthening the dollar. Furthermore, the day has been marked by risk aversion, negatively impacting the major currencies in the LATAM region.
Finally, the electoral context in the United States is also influencing the markets. The apparent lead of Donald Trump in the polls is driving what is known as the "Trump Trade", which has strengthened the dollar recently. Given these factors, the Mexican peso seems to be losing the key psychological level of 20 pesos per dollar in today's trading.
Looking ahead, the upcoming U.S. labor market data (NFP) will be crucial, especially considering the presidential election next Tuesday. If Donald Trump returns to the White House, we could see a significant additional devaluation of the peso, with a possible target of 22 pesos per dollar.."
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