Mexican Peso Rallies its Most this Year on Strong US Jobless Claims Data.

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Mexican Peso Rallies its Most this Year on Strong US Jobless Claims Data.
Mexican Peso Rallies its Most this Year on Strong US Jobless Claims Data.
Mexican Peso Rallies its Most this Year on Strong US Jobless Claims Data.

The Mexican peso rose to its strongest level so far this year after U.S. jobless claims declined, as its economy strengthens. U.S. is Mexico’s largest trading partner.

The peso was up 0.1 percent at 12.9543 a U.S. dollar in mid-morning trading in Mexico City. This was the highest level since December 18.

“The U.S. recovery is obviously an important driver, and local economic conditions are starting to look a little bit healthier,” Aryam Vazquez, a senior emerging-market economist at Oxford Economics in New York, told Bloomberg. “We expect that economic activity will pick up from the second quarter onwards.”

New applications for unemployment claims in the United States plunged by 26,000 to stand at 319,000 in the week ending May 3, reported the Labor Department on Thursday. Economists surveyed by Bloomberg had expected the claims to decline to 325,000.

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Consumer prices in Mexico in April plunged more economists had predicted after mobile phone charges, vegetable and fruit costs fell, causing the yearly inflation to touch its weakest level in half a year.

The U.S. dollar, on the other hand, advanced against the euro after ECB President Mario Draghi revealed that the bank may roll out stimulus in order to tame deflation when it meets in June. The dollar reversed its earlier decline that saw it touch a 2 ½ year low after the euro plunged 0.34 percent to $1.3864. The euro had earlier touched $1.3992, the strongest level since November 2011.

The greenback surged 0.24 percent versus the Japanese yen to 101.64. However, the dollar fell 0.23 percent against the Swiss franc to 0.8783 francs. The U.S. dollar index, which tracks the greenback against six major peers, advanced 0.2 percent to 79.36. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Yashu Gola at yashu@forexminute.com