Forex Market: USD/MXN daily trading forecast

Yesterday’s trade saw USD/MXN within the range of 13.0494-13.1564. The pair closed at 13.1538, gaining 0.38% on a daily basis.

At 11:13 GMT today USD/MXN was down 0.11% for the day to trade at 13.1378. The pair touched a daily low at 13.1374 at 11:10 GMT.

Fundamental view

United States

Employers in all sectors of economy in the United States, excluding the farming industry, probably added 225 000 new jobs in August, according to the median forecast by experts, after a job gain of 209 000 in July. The non-farm payrolls report presents the total number of US employees in any business, excluding the following four groups: farm employees, general government employees, employees of non-profit organizations, private household employees. The reading, released most often, varies between + 10 000 and as much as + 250 000 at times when economy is performing well. Despite the volatility and the possibility of large revisions, the non-farm payrolls indicator presents the most timely and comprehensive reflection of the current economic state. Total non-farm payrolls account for 80% of the workers, who produce the entire Gross Domestic Product of the United States. In case of a larger-than-expected gain in jobs, the US dollar would receive a boost.

Average Hourly Earnings probably increased 0.2% in August compared to July, after a flat performance in July compared to June.

At the same time, the rate of unemployment in the country probably fell to 6.1% in August, according to the median forecast by experts, from 6.2% in July. It represents the percentage of the eligible work force that is unemployed, but is actively seeking employment. A person who is not classified as employed or unemployed is excluded from the statistics. One counts as unemployed, if he falls in all of the following categories: he/she was unemployed during the last week; he/she is able bodied; he/she has been seeking employment for a period of at least four weeks, which end during the week when the research is conducted. People, who have been laid off and are awaiting to be hired again, are also classified as unemployed. In case the unemployment rate met expectations or even fell further, this would have a bullish effect on the greenback. The Bureau of Labor Statistics will release the official employment data at 12:30 GMT.

Mexico

Consumer sentiment

At 13:00 GMT Mexicos Instituto Nacional de Estadística y Geografía (INEGI) is to report on consumer sentiment in the country. The corresponding index came in at 90.52 in July, or the lowest level since April. It is based on a sample of 2336 households located in the 32 major cities in Mexico. The index has a base of 100 as of January 2003. Readings above 100 are indicative of optimism, 100.00 indicates neutrality, while readings below 100 signify predominant pessimism. The survey on consumer confidence belongs to the group of economic indicators, which measure financial confidence among consumers. The more confidence in economic conditions consumers have, the more inclined they will be to spend money, which in turn stimulates the economy. Better than projected survey results usually signal that optimism among consumers has strengthened, while this may lead to higher spending in the country. Better results tend to provide support to the local currency.

Bank of Mexico policy decision

Bank of Mexico (Banco de México) probably left its benchmark interest rate (overnight interbank rate) without change at 3.0% at the policy meeting today. The central bank reduced the overnight rate by 0.50% to the current record low level of 3.0% at its June 6th meeting, in order to bolster economy, that has not managed to recover in 2014. At the end of May Bank of Mexico revised down its GDP forecast for 2014 to between 2.3% and 3.3% from 3% to 4%, as estimated earlier.

Short-term interest rates are of utmost importance for the valuation of national currencies. In case Bank of Mexico is dovish about inflationary pressure in the economy and, thus, decides to maintain or even further reduce the benchmark rate, this will have a bearish effect on the peso.

The official policy decision is scheduled to be announced at 14:00 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 13.1199. In case USD/MXN manages to breach the first resistance level at 13.1904, it will probably continue up to test 13.2269. In case the second key resistance is broken, the pair will probably attempt to advance to 13.2973.

If USD/MXN manages to breach the first key support at 13.0834, it will probably continue to slide and test 13.0129. With this second key support broken, the movement to the downside will probably continue to 12.9763.

The mid-Pivot levels for today are as follows: M1 – 12.9946, M2 – 13.0481, M3 – 13.1016, M4 – 13.1551, M5 – 13.2086, M6 – 13.2621.

In weekly terms, the central pivot point is at 13.0998. The three key resistance levels are as follows: R1 – 13.1549, R2 – 13.2219, R3 – 13.2770. The three key support levels are: S1 – 13.0328, S2 – 12.9777, S3 – 12.9107.