The U.S. Dollar is trading in mostly weak ranges as we close a week marked by anxiety over troubles in the Labor sector and concern over the length of the U.S. government shutdown
Overview
Following elections across some states, politicians seem to be putting aside the campaign signs as there are reports of more fruitful and productive talks towards bringing the federal government back to full throttle.
Announcements of cancelled flights, which only exacerbate a sensitive time for businesses, have increased pressure on government officials to find a resolution and prioritize getting payrolls as well as welfare benefits rolling. Even without government data available, there seems to be growing consensus that the U.S. economy is facing challenges, and that may add to uncertainty over how the Fed chooses to address it.
As far as other central banks’ decisions, they have also highlighted the problem of stagnation and in the case of Mexico, Banxico policymakers yesterday chose to continue interest rate cuts to give relief to the financial environment. In the U.S., the Fed’s mentality looks like a coinflip with equity markets disappointed that stimulus is not guaranteed. This makes FX guidance difficult, and forecasting seems almost a fool’s errand. We shall see if next week we get a shift in overall sentiment with a holiday on Tuesday and the increased likelihood that we will get federal services going. MonexUSA will be closed on Tuesday the 11th in observance of Veterans Day.
What to Watch This Week…
- Monex USA Online is always open
MXN ⇑
The Mexican Peso improved in value regardless of what initially seemed like a “dovish” central bank meeting that resulted in a highly expected 25-basis-point rate reduction. Nevertheless, the key was in the details of the language of the policy decision, which cited how members wanted to revise the reference interest rate instead of looking to make “further adjustments,” thus lowering chances of lower borrowing costs into 2026. Inflation increasing played a major role in their choice of language about taking a more cautious approach going forward. As discussed in our November Currency Outlook, MXN has seen an 11.0% rise in 2025, and it seems difficult to turn that around at the moment.
CAD ⇑
The Canadian Dollar has improved after being down all week following positive data in the form of Unemployment headed downwards. October’s Net Change in Employment saw a shocking addition of 66.6K jobs instead of the contraction of (-5.0K) as estimated. The participation Rate also ticked up while the Unemployment Rate fell from 7.1% to 6.9%. “Loonie” fortunes have changed surely after having fallen to its weakest point against the Buck since April.
