- USD/MXN halts its advances on subdued US Bond yields.
- The recent data reinforced the case for the Fed to maintain higher interest rates to address inflationary pressures.
- Mexico’s Current Account (Q4) increased to $11,662M against the expected $5,000M.
The USD/MXN pair experiences a decline after two consecutive days of gains, trading around 17.10 during the early European session on Monday. This downward movement is attributed to subdued US Treasury yields, which are putting pressure on the US Dollar (USD), consequently, undermining the USD/MXN pair.
The US Dollar Index (DXY) is slightly lower, hovering around 103.90, while the 2-year and 10-year yields on US Treasury notes stand at 4.67% and 4.22%, respectively, at the time of writing. However, the US Dollar (USD) maintained stability after recording gains in the past two sessions.
The US Dollar (USD) received support from robust employment data and mixed Purchasing Managers Index (PMI) figures from the United States (US). This reinforced the case for the Federal Reserve (Fed) to maintain higher interest rates to address inflationary pressures.
Investors are expected to closely watch key economic indicators, including Gross Domestic Product Annualized (Q4), Core Personal Consumption Expenditures, and ISM Manufacturing PMI later in the week. Additionally, the release of the Fed Monetary Policy Report will be closely monitored for further insights into the central bank's stance.
On the contrary, the Mexican Peso (MXN) might have found support from positive economic data released on Friday. The Bank of Mexico (Banxico) reported a significant increase in the Current Account (Q4) to $11,662M, surpassing expectations of $5,000M and the previous figure of $908M. Additionally, the Accumulated Current Account/GDP rose by 2.47% in the fourth quarter of 2023, compared to the previous quarter's reading of 0.19%.
Moreover, Mexico's 1st half-month Inflation for February declined by 0.1%, contrary to the expected increase of 0.15% and the previous rise of 0.49%. Similarly, the 1st half-month Core Inflation expanded by 0.24%, slightly below the expected 0.28% and matching the previous figure of 0.25%. Market participants are anticipated to closely monitor the Trade Balance data for January, scheduled for release on Tuesday.
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 flirts with daily tops near 1.0730
The continuation of the selling pressure in the Greenback now lends further oxygen to the risk complex, encouraging EUR/USD to revisit the area of daily highs near 1.0730.
USD/JPY looks stable around 156.50 as suspicious intervention lingers
USD/JPY remains well on the defensive in the mid-156.00s albeit off daily lows, as market participants continue to digest the still-unconfirmed FX intervention by the Japanese MoF earlier in the Asian session.
Gold advances for a third consecutive day
Gold fluctuates in a relatively tight channel above $2,330 on Monday. The benchmark 10-year US Treasury bond yield corrects lower and helps XAU/USD limit its losses ahead of this week's key Fed policy meeting.
Week Ahead: Bitcoin could surprise investors this week Premium
Two main macroeconomic events this week could attempt to sway the crypto markets. Bitcoin (BTC), which showed strength last week, has slipped into a short-term consolidation.
Five Fundamentals for the week: Fed fears, Nonfarm Payrolls, Middle East promise an explosive week Premium
Higher inflation is set to push Fed Chair Powell and his colleagues to a hawkish decision. Nonfarm Payrolls are set to rock markets, but the ISM Services PMI released immediately afterward could steal the show.