- USD/MXN recovers some lost ground and hovers around 17.90.
- Chicago Fed and Philadelphia Fed President maintained their dovish stances, which weigh on the US Dollar.
- World Bank raised its economic growth projection for Mexico to 3.2% in 2023.
- Investors await the US Retail Sales for September.
USD/MXN posts modest gains around 17.90 during the Asian session on Tuesday. The rebound of the pair is bolstered by the renewed demand for US Treasury yields. In the absence of top-tier economic data released from Mexico, the USD/MXN pair remains at the mercy of USD price dynamics and risk sentiment. Furthermore, a rise in geopolitical tension between Israel and Hamas might cap the downside of the pair and boost the US Dollar (USD), a safe-haven asset.
That said, the dovish remarks from many Federal Reserve (Fed) officials weigh on the US Dollar (USD). Chicago Fed President Austan Goolsbee maintained his dovish stance by saying that a fall in US inflation is not a bleep, while Philadelphia Fed President Patrick Harker said that in the absence of some turn in the data, the Fed should hold rates steady.
Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD relative to a basket of foreign currencies, catches a minor bid into 106.30. The US Treasury yield recovers its losses, with the US 10-Y yield staying at 4.748% by press time.
About the data, the Federal Reserve Bank of New York revealed on Monday that the US NY Empire State Manufacturing Index for October dropped to 4.6 from the previous reading of 1.9 rise, beating the estimation of a 7.0 decline. Last week, the US Consumer Price Index (CPI) annually and monthly for September came in at 3.7% and 0.4%, respectively. Both figures exceeded market expectations.
In accordance with the International Monetary Fund (IMF), the World Bank raised its economic growth projection for Mexico to 3.2% in 2023. This forecast surpasses the Ministry of Finance of Mexico's expectations. It’s worth noting that the Bank of Mexico’s committee decided to maintain the interest rate at a record high of 11.25% for the fourth consecutive time at its September meeting, citing an uncertain inflationary outlook.
Looking ahead, the US Retail Sales will be released later on Tuesday, which is expected to rise 0.2%. The Fed speakers on Tuesday, including Williams, Bowman, Barkin, and Kashkari, could offer some hints about further monetary policy paths. On Friday, Mexico's Retail Sales for August will be due. Traders will take cues from these data and find trading opportunities around the USD/MXN pair.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.