USD/MXN continues the losing streak, moves down to near 17.16

• USD/MXN loses ground despite a stronger US Dollar after the US GDP release.
• The recent Mexico data have contributed support to underpinning the MXN.
• Traders will observe US PCE data to gain further cues on the US economic landscape.

USD/MXN continues its losing streak for the third consecutive session on Friday, inching lower to 17.16 during the European session. The USD/MXN pair encounters a challenge following the release of the 1st half-month inflation data on Wednesday from Mexico, indicating a resurgence in inflation within the country. On Thursday, the Mexican Peso (MXN) strengthened further after the Mexican Jobless Rate displayed a contraction in the number of unemployed workers in the country. These potential figures may deter the Bank of Mexico (Banxico) from considering a reduction in policy rates.

The non-seasonally adjusted Jobless Rate in Mexico reduced to 2.6%, matching expectations in December and down from the previous reading of 2.7%. While the seasonally adjusted Jobless Rate remains stable at 2.8%. Additionally, analysts at BNP Paribas propose that the recent inflation report in Mexico could act as a deterrent for the Bank of Mexico (Banxico) from considering a policy easing.

The stronger-than-expected Gross Domestic Product (GDP) Annualized figure from the United States has provided support for the US Dollar (USD), thereby limiting the losses of the USD/MXN pair. The US Gross Domestic Product Annualized (Q4) reported a reading of 3.3%, surpassing the previous figure of 4.9% and exceeding the market consensus of 2.0%. Additionally, the US Gross Domestic Product Price Index (Q4) grew by 1.5% against the previous growth of 3.3%. Surprisingly, US Initial Jobless Claims for the week ending on January 19 reduced to 214K, contrary to the expected increase of 200K from the prior 189K.

Looking ahead, on Friday, Mexico's Trade Balance data is set to be released by the National Institute of Statistics and Geography (INEGI). The market is anticipating a trade surplus of $1.4B in December, up from November's figure of $0.63B. On the US docket, market participants will closely watch the release of the Personal Consumption Expenditures (PCE) Price Index data on Friday for further insights into US economic conditions.