Peso Rises as U.S. Shutdown Weakens Dollar

The Mexican peso appreciated against the dollar on Wednesday morning. The local currency gained ground against a retreating greenback after the U.S. government entered a partial shutdown that threatens to delay an anticipated monthly employment report.

The spot exchange rate is at the level of 18.2959 units per dollar. Compared to a closing rate of 18.3147 units yesterday, with the official data from the Bank of Mexico (Banxico), this movement represents a gain of 1.88 centavos or 0.10 percent for the peso. The price of the dollar is moving in a range between a high of 18.3809 units and a low of 18.2400 units.

The U.S. Dollar Index (DXY) from Intercontinental Exchange, which compares the U.S. currency to six major currencies, was down 0.26% at 97.57 units.

The U.S. government entered a partial shutdown at midnight, when funding for the fiscal year expired and Republican and Democratic lawmakers in Washington failed to reach a last-minute provisional agreement to avoid it. The U.S. Departments of Labor and Commerce had stated that their statistical agencies would suspend the publication of data in the event of a partial shutdown. This includes the release of the monthly non-farm payroll report scheduled for Friday.

"Today, the Mexican peso is favored by a weakening of the dollar upon assessing the announcement of the U.S. government shutdown, which compromises the publication of economic reports and implies the suspension of many federal posts," said Monex Grupo Financiero.

The payroll report is key for monetary policy due to the Federal Reserve's dual mandate. Traders expect it could provide clarity regarding expectations for interest rate cuts, following Friday's inflation figures that supported the possibility.