USD/MXN gains ground on subdued US Dollar, trades higher near 17.25
- USD/MXN receives upward support as the Greenback suffers losses.
- The decline in US bond yields reinforces the weakening of the US Dollar.
- Banxico survey increased their growth forecast from 2.10% to 2.29%, with inflation to reach 4.0% in 2024.
USD/MXN extends its gains on the second consecutive session, trading higher near 17.25 during the European hours on Monday. The USD/MXN pair gains ground on the subdued US Dollar, which could be attributed to the lowered US Treasury yields.
The US Dollar Index (DXY) moves sideways to 102.50, by the press time, with 2-year and 10-year yields on US bond coupons standing lower at 4.41% and 3.91%, respectively.
Additionally, Atlanta Fed President Raphael Bostic has suggested the potential for an interest rate cut in the third quarter of 2024. Meanwhile, Chicago Fed President Austan Goolsbee has not ruled out the possibility of a rate cut at the Federal Reserve's meeting next March. These dovish comments from Federal Reserve officials contribute to the prevailing pressure on the Greenback.
According to the Banxico survey, Mexican economists have increased their growth forecast for 2024 from 2.10% to 2.29%, while anticipating inflation to reach 4.0% next year. In terms of monetary policy, they expect the central bank to bring rates down to 9.25%.
The Mexican Peso (MXN) has received upward support following Banxico's decision to maintain policy rates at the level of 11.25%. This decision and the economic outlook provided by the survey are contributing factors to the currency's positive momentum.
Investors will likely observe data releases from Mexico including Private Spending, Retail Sales, and seasonally adjusted Trade Balance for November. On the United States docket, Consumer Confidence and Existing Home Sales Change will be eyed.
Author
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
