Mexico’s peso reached its strongest level since August 2011 as sputtering U.S. job creation boosted speculation that the Federal Reserve will maintain its record stimulus.
The currency jumped 1.1 percent, the biggest daily advance since Jan. 2, to 12.1752 per U.S. dollar at 3 p.m. in Mexico City, according to data compiled by Bloomberg. It’s increased 1.3 percent against the dollar on the week, fueling a 5.6 percent advance this year, which is the biggest rally against the dollar’s 16 most-traded counterparts.
Payrolls in the U.S., Mexico’s biggest trading partner, posted the smallest gain in nine months in March, Labor Department data showed today in Washington. Fed officials have have said they are waiting for sustained signs of job-market resilience before winding down their $85 billion of monthly bond purchases. The U.S. jobs data spurred investor speculation that the Fed will continue the so-called quantitative easing, or QE, according to Mike Moran, a senior currency strategist at Standard Chartered Plc in New York.
“After the number that we say today you can pretty much kiss goodbye the possibility of the Fed reducing the speed of QE anytime soon,” Alberto Bernal the head of fixed-income research at Miami-based brokerage Bulltick Capital Markets. “One of the best ways of playing quantitative easing is to be long the peso.”
The payrolls grew by 88,000 in March, less than the most-pessimistic forecast in a Bloomberg survey, after a revised 268,000 February increase. The jobless rate fell to 7.6 percent from 7.7 percent.
Central bank Governor Agustin Carstens said today at an event in Ciudad Juarez, Mexico that the peso is a reflection of the nation’s economic strength.
“To the extent that we have a strong economy, we’re going to have a strong currency,” he said. “This is a good combination of factors.”
The difference between the number of wagers by hedge funds and other large speculators on a peso advance versus those on a drop -- so-called net longs -- was 142,755 on April 2, compared with 128,162 a week earlier, according to data compiled by the Washington-based Commodity Futures Trading Commission.
Latin America’s second-biggest economy is expected to grow faster than Brazil for a third-straight year in 2013, according to the median forecast of analysts surveyed by Bloomberg.
The yield on Mexico’s peso-denominated bond due in 2024 tumbled seven basis points, or 0.07 percentage point, to 4.89 percent, according to data compiled by Bloomberg.