Mexico Consumer Confidence Index Release: Economic and Sporting Events Impacting Currency Outlook?

Today marks an eventful day for Mexico on both economic and sporting fronts. At 12:00 GMT, the Mexico Consumer Confidence index will be released, reflecting the sentiments and expectations regarding economic conditions and purchasing behaviour. Tomorrow (March 7) , the Mexican national women’s football team , “El Tri Femenil” or “La Tri” , faces Brazil in the Concacaf Women’s Gold Cup semifinal. Despite Brazil’s historical dominance over Mexico, with a record of 14 wins, 1 draw, and 2 losses in their 17 encounters, Mexico remains hopeful, drawing inspiration from their last victory against Brazil in 2019.

Meanwhile, the Mexican peso started the week positively, strengthening to below 17 against the US dollar for the first time this month.. The outcomes of both the Consumer Confidence index and the football match against Brazil could likely impact Mexico’s economy, shaping perceptions and potentially influencing market movements, including currency exchange rates and investor sentiment.

In January 2024, the consumer confidence indicator in Mexico rose to 47.1, up from 46.8 in December 2023. This uptick was driven by improvements in assessments regarding both households’ financial situations over the next 12 months (58.3 compared to 57.4) and the country’s economic outlook for the coming year (50.8 compared to 50.1). However, there was a slight decline in the propensity to make major purchases, which fell to 30.7 from 31.

Over the period from 2001 to 2024, Consumer Confidence in Mexico has averaged 39.95 points. It reached its highest point of 48.50 points in February 2019 and its lowest point of 28.60 points in January 2017.

Higher consumer confidence tends to strengthen the currency as it signals optimism about future economic conditions, leading to increased investment and spending. Conversely, lower consumer confidence can weaken the currency as it suggests pessimism about the economy, potentially leading to reduced investment and spending.

From a technical analysis standpoint, on the Daily chart of the USDMXN exchange rate, the currency pair has been trading within a range with 17.3776 acting as resistance and 16.7741 as support. A breach below the support level suggests a higher likelihood of further downward movement in the exchange rate, whereas a bounce off the support implies an increased probability of the exchange rate rising towards the resistance.

On the 1-hour chart of USDMXN, the exchange rate has been fluctuating between 16.9708 as resistance and 16.8893 as support. If the support level is breached, there is a higher probability of the exchange rate declining further. Conversely, if the support holds, there is a greater chance of the exchange rate climbing towards the resistance level.