Mexico Peso Slips as U.S. Jobs Fuel Fed Stimulus Reduction Bets

Mexico’s peso fell for a third straight day as signs of an improving U.S. labor market fueled speculation that the Federal Reserve will cut stimulus that’s helped drive demand for the Latin American country’s debt.

The peso declined 0.5 percent to 13.1226 per dollar at 4 p.m. in Mexico City, the weakest closing level since Nov. 12. Today’s drop pushed the currency’s loss this month to 0.8 percent.

The peso has slipped 5 percent in the past six months on wagers the Federal Reserve is preparing to reduce $85 billion in monthly bond purchases as the U.S. labor market improves. Fewer Americans than projected filed applications for unemployment benefits last week, a sign that the labor market is showing resilience.

“All the data that come out well in terms of economic activity go against the Fed’s monetary policy,” Rafael Camarena, an economist at Grupo Financiero Santander Mexico SAB in Mexico City, said in a telephone interview. “Today the economic data demands attention in terms of unemployment applications continuing to fall.”

U.S. jobless claims in the week ended Nov. 23 declined 10,000 to 316,000, the fewest in two months, the Labor Department said today in Washington. The median forecast of 44 economists surveyed by Bloomberg called for an increase to 330,000.

Yields on Mexican government debt maturing in 2042 declined four basis points, or 0.04 percentage point, to 7.66 percent, according to data compiled by Bloomberg.

Before it's here, it's on the Bloomberg Terminal.