USD/MXN halts its losing streak as US Dollar improves, edges higher to 17.00
|- USD/MXN attracts traders amidst risk aversion ahead of key data releases from the United States.
- US ISM Services PMI is expected to ease at 53.0 for February, slightly lower than 53.4 prior.
- Banxico could reduce interest rates by 75 bps over the next six months.
USD/MXN snaps its three-day losing streak, inching higher to near 17.00 during the early European hours on Tuesday. The US Dollar (USD) strengthens amid risk aversion as investors brace for significant economic data releases from the United States (US) later in the week.
Market focus turns to the ISM Services PMI data slated for release on Tuesday, with expectations at 53.0 for February, slightly lower than the previous figure of 53.4. Notably, concerns surrounding inflation have eased following the PCE Price Index meeting expectations.
Traders appear cautious and are opting to wait for Federal Reserve (Fed) Chair Jerome Powell's congressional testimony on Wednesday and Thursday. They are seeking additional insights into the Federal Reserve’s potential rate-cut trajectory.
Atlanta Federal Reserve (Fed) President Raphael Bostic's remarks on Monday garnered attention, as he expressed uncertainty regarding achieving a soft landing. Bostic indicated that he does not anticipate consecutive rate cuts when they begin but still expects two 25-basis point rate cuts in 2024.
Market expectations remain high for the Bank of Mexico (Banxico) to implement monetary policy easing in March, with investors expecting a reduction of 75 basis points (bps) over the next six months. Banxico officials have emphasized a measured approach to rate adjustments, highlighting the importance of maintaining higher rates for an extended period.
Consumer Confidence data is scheduled for release on Wednesday, followed by inflation data on Thursday. The Mexican Peso (MXN) received upward support against the US Dollar (USD) following last week's release of January's labor numbers. The jobless rate increased to 2.9% year-over-year from 2.6% previously, surpassing expectations of a 2.8% rise.
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