The U.S. Dollar is trading in mostly weak ranges with the Mexican Peso being the exception after data releases displaying economic performance divergence.
Overview
Today’s release of ADP Employment Change showed better-than-expected numbers for January as well as December after an upward revision. 183K vs. 150K payrolls were added last month while 2024 closed out with 176K instead of 122K. The labor sector seems to be having no problems per indicators so the official Non-Farm Payrolls figure should be able to match estimates of 170K. Later at 9:45AM we get S&P Purchasing Managers Index accompanied by Institute of Supply Management Services at 10AM.
Markets in general are trading with caution as they watch out for developments in tariffs talks between the U.S. and other countries. While equity traders and investors digest poor tech earnings, they are also hopeful that the implementation of costs to trade between the world’s two largest economies can be delayed somehow. China’s response was considered measured and restrained in retaliation, thus the lack of fear in markets and a bounce for FX against the Buck. The narrative can change at any given moment, but for now tariffs will remain a focus.
What to Watch This Week…
- Bank of England & Banxico tomorrow
- US Nonfarm Payrolls, Friday 8:30AM
- Monex USA Online is always open
MXN ⇓
The Mexican Peso is the one currency losing ground to the Dollar following data highlighting the loss in investment and Private Consumption. Fixed Investment numbers from November revealed a contraction while Private consumption came in lower than expected at 0.3% vs. 1.0%. The lack of momentum in the economy is not boding well for MXN, which was resilient after the tariff spat over the weekend. For now, there are not tariffs coming, but adjusting to more friction with the U.S. will be something that could exacerbate Peso pain. Banxico, the central bank, meets tomorrow.
EUR ⇑
The Euro is rising after January PMIs revealed expansionary readings demonstrating that the Euro-zone economy is still in the midst of improvement. Last month, the Euro climbed by 1.0% and could remain on a slow but upward trend if indicators aid it. Per our February outlook, if Germany can show signs of recovery after seeing some contractions in data, the shared currency could remain afloat. Again, the potential for tariffs remain an obstacle if they are indeed added.
