Unemployment claims rose, though bolstered the USD vs. the MXN

Market mood has deteriorated, as shown by Wall Street, retracing its earlier gains. The Bureau of Labor Statistics (BLS) revealed the Initial Jobless Claims for the week ending on March 4 were 211K higher than expected at 195K. Although claims rose, the ADP Employment Change data, and job openings, continued to portray a tight labor market, justifying the Federal Reserve’s Chair Jerome Powell’s hawkishness at his appearance before the US Congress.

The US Dollar Index (DXY) is losing 0.38%, down at 105.250, putting a lid on the USD/MXN recovery towards the weekly highs at around 18.1788.

On the Mexican front, inflation slumped in the headline and core readings. The Consumer Price Index for February came at 7.62% YoY, below estimates of 7.68% and the previous month’s readings of  7.91%. Core CPI rose by 8.29% YoY, above the consensus but beneath January’s 8.45%.

“Today’s (inflation) print reduces the odds that (the Mexican central bank) chooses to go ahead with a 50 bps hike, though incoming data as well as the outlook for the Fed remain key influences on the bank’s decision,” Scotiabank economists said in a note.

Following the Mexican inflation release, the USD/MXN climbed above the $18.00 figure, extending its gains ahead of a busy US economic calendar. Nevertheless, the bias is downwards, but it could shift to neutral if buyers reclaim 18.3000.