- USD/MXN retreats after the recent surge as Banxico kept rates at 11.25%.
- Mexico’s central bank has committed to achieving its 3% target in 2025.
- US Dollar receives upward support after Fed Chair Powell’s hawkish comments.
USD/MXN retreats from a weekly high, bidding near 17.7600 during the Asian trading hours on Friday. The pair received upward support after US Federal Reserve (Fed) Chair Jerome Powell mentioned at the International Monetary Fund (IMF) event on Thursday that current policies may not be enough to control inflation.
This sentiment resulted in a surge in US Treasury yields, offering support for the US Dollar (USD). The US Dollar Index (DXY) hovers around 105.90, with the 10-year US bond yield standing at 4.61% by the press time.
Additionally, the US weekly Initial Jobless Claims for the week ending November 4, coming in at 217K, slightly below both the market forecast of 218K and the previous week's figure of 220K, likely added further support to the Greenback.
On Thursday, the Bank of Mexico (Banxico) opted to maintain interest rates at 11.25%. In addition, the central bank has committed to working towards achieving its 3% target for headline inflation in the year 2025.
Economists at ING believe that Banxico is likely content to maintain the 600 basis points policy rate premium over Fed rates. This stance has contributed to the relative stability of USD/MXN, reduced implied volatility, and enhanced the Peso's appeal for carry trade strategies.
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
USD/JPY holds gains near 145.00 ahead of BoJ policy decision
USD/JPY consolidates gains near the 145.00 mark early Tuesday as traders keenly await the latest BoJ monetary policy announcements for a fresh direction. In the meantime, no US-Japan trade deal reached at the G7 Summit undermines the Japanese Yen, lending support to the pair amid a US Dollar upswing.
AUD/USD retreats toward 0.6500 amid cautious mood
AUD/USD sustains the overnight late pullback from a fresh YTD peak as rising geopolitical tensions keep investors on the edge and offer some support to the US Dollar. Trade-related uncertainties also undermine the Aussie. However, Fed rate cut bets could cap any meaningful USD appreciation and limit losses for the pair.
Gold price draws support from the global flight to safety
Gold price attracts some dip-buyers in the Asian session, reversing a part of the previous day's downfall as rising geopolitical tensions revive safe-haven demand. Bets that the Fed will resume its rate-cutting cycle in September benefit the non-yielding yellow metal, though a modest US Dollar uptick could act as a headwind.
Bank of Japan set to hold rates steady as officials mull halving the pace of tapering JGB purchases
The Bank of Japan is set to keep interest rates steady at 0.50% on Tuesday. The focus will be on the BoJ’s JGB purchases tapering plan as well as any hints on the timing of the next rate hike. The BoJ policy announcements are expected to significantly impact the Japanese Yen.
Chinese data suggests economy on track to hit 2025 growth target
China's May data was mixed with strong retail sales, but soft readings on fixed-asset investment and property price. Overall, though, data suggests that China remains on track to achieve its growth target in the first half of 2025.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.