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.
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