USD/MXN retraces recent gains near 17.1400, focus on US GDP data

• USD/MXN failed to cheer the better-than-expected US data.
• The mixed remarks from Fed officials put weight on the US Dollar.
• Banxico Deputy Governor Jonathan Heath indicated one or two rate cuts in 2024.

USD/MXN halts its three-day winning streak due to the softer US Dollar (USD), which could be attributed to the mixed remarks from the Federal Reserve’s (Fed) members. Moreover, the mixed data from the United States (US) failed to heal the Greenback. The USD/MXN pair trades around 17.1400 during the European session on Wednesday.

Fed Governor Christopher Waller suggested a more accommodative approach of not insisting on maintaining high-interest rates, while Fed Governor Michelle Bowman mentioned the likelihood that the US Fed could keep the policy rate at a higher level than pre-pandemic levels.

In September, the US Housing Price Index (MoM) maintained stability at 0.6%, surpassing anticipated levels. Simultaneously, the CB Consumer Confidence Index saw an uptick, reaching 102.0. In contrast, the Richmond Fed Manufacturing Index reported an unexpected negative reading of 5, deviating from the anticipated positive figure.

On the other side, the Mexican Peso (MXN) lost ground earlier this week against the US Dollar as Jonathan Heath, Bank of Mexico’s (Banxico) Deputy Governor, remarked that core prices need to decrease further. He also indicated that there might be one or two rate cuts next year, emphasizing that any adjustments would be made "very gradually" and "with great caution."

Moreover, the recent minutes from Banxico highlight the significance of maintaining higher interest rates for an extended period to achieve the target inflation rate. This stance, combined with positive inflation data disclosed earlier., might have put downward pressure on the USD/MXN pair. Additionally, traders will watch Mexico’s Jobless Rate for October on Thursday.