Forex Market: USD/MXN daily trading forecast

Yesterday’s trade saw USD/MXN within the range of 13.4050-13.5105. The pair closed at 13.4277, losing 0.53% on a daily basis.

At 8:05 GMT today USD/MXN was up 0.27% for the day to trade at 13.4662. The pair touched a daily high at 13.4672 at 8:05 GMT.

Fundamental view

United States

Change in Employment

Employers in the US non-farm private sector probably added 200 000 new jobs during September, according to the median estimate by experts, following 204 000 new positions added in August. The latter has been the slowest pace of job growth since May. The employment report by Automated Data Processing Inc. (ADP) is based on data that encompasses 400 000 – 500 000 companies employing over 24 million people, working in the 19 major sectors of the economy. The ADP employment change indicator is calculated in accordance with the same methodology, which the Bureau of Labor Statistics (BLS) uses. Published two days ahead of governments employment statistics, this report is used by traders as a reliable predictor of the official non-farm payrolls data. Creation of jobs is considered of utmost importance for consumer spending, while the latter is a major driving force behind economic growth. In case expectations were exceeded, this would bolster demand for the dollar. The official figure is scheduled to be published at 12:15 GMT.

ISM Manufacturing

Activity in United States’ manufacturing sector probably remained little changed in September, with the corresponding manufacturing PMI coming in at a reading of 58.5, according to expectations, down from 59.0 in the prior month. Augusts value has been the highest since March 2011 and has been bolstered by an increase in gauges of production and new orders. The New Orders Index was reported at 66.7 in August, or an increase by 3.3 points from 63.4 in July, which spoke of growth in new orders for the 15th successive month. The index of Production came in at 64.5, or an increase by 3.3 points compared to Julys reading of 61.2, according to data by the Institute for Supply Management.

The Manufacturing Purchasing Managers’ Index (PMI) is a compound index, which represents manufacturing activity in 20 different industries. It is comprised by four equally-weighted components: seasonally adjusted employment, seasonally adjusted production inventories, seasonally adjusted new orders and supplier deliveries. The index is based on a survey of 300 purchasing managers.

Participants can either respond with “better”, “same”, or “worse” to the questions about the industry, in which they operate. The resulting PMI value is measured from 0 to 100. If the index shows a value of 100.0, this means that 100% of the respondents reported an improvement in conditions. If the index shows a value of 0, this means that 100% or the respondents reported a deterioration in conditions. If 100% of the respondents saw no change in conditions, the index will show a reading of 50.0. Therefore, readings above the key level of 50.0 are indicative of expanding activity in the sector of manufacturing. Higher than projected values would certainly provide support to the US dollar. The Institute for Supply Management (ISM) is to release the official PMI reading at 14:00 GMT.

Mexico

Activity in Mexican manufacturing probably remained almost unchanged in September. The respective Purchasing Managers Index by HSBC probably slipped to 51.7 last month from 52.1 in August. The indicator, which is based on a monthly survey, registered an all-time high at 57.10 in December 2012. Values above the key level of 50.0 indicate optimism among responding company executives. In case the PMI fell more than expected, this might lead to a sell-off in the peso. The official reading is due out at 14:30 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 13.4477. In case USD/MXN manages to breach the first resistance level at 13.4905, it will probably continue up to test 13.5532. In case the second key resistance is broken, the pair will probably attempt to advance to 13.5960.

If USD/MXN manages to breach the first key support at 13.3849, it will probably continue to slide and test 13.3422. With this second key support broken, the movement to the downside will probably continue to 13.2795.

The mid-Pivot levels for today are as follows: M1 – 13.3109, M2 – 13.3636, M3 – 13.4164, M4 – 13.4691, M5 – 13.5219, M6 – 13.5746.

In weekly terms, the central pivot point is at 13.3807. The three key resistance levels are as follows: R1 – 13.5530, R2 – 13.6589, R3 – 13.8312. The three key support levels are: S1 – 13.2748, S2 – 13.1025, S3 – 12.9966.