USD/MXN advances to near 16.60 ahead of Mexico’s Jobless Rate, Trade Balance data

• USD/MXN appreciates ahead of Jobless Rate, Trade Balance from Mexico.
• The decline in the US Treasury yields could limit the advance of the US Dollar.
• Banxico Governor Victoria Rodriguez Ceja emphasized that the fight against inflation is not yet over.

USD/MXN retraces its recent losses registered in the previous two sessions. The Mexican Peso (MXN) gains ground ahead of the Jobless Rate and Trade Balance data from Mexico. The USD/MXN pair advances to near 16.60 during the European trading hours on Wednesday.

INEGI’s Mexican economic activity gauge expanded, rebounding from the two-year low but missing the estimated increase. Despite the slight rebound, the result aligned with the trend that the Mexican economy is losing its resilience to restrictive interest rates by Banxico.

Banxico Governor Victoria Rodriguez Ceja maintained a dovish stance during an interview. Rodriguez emphasized that the fight against inflation is not yet over, indicating that discussions regarding further rate cuts to the main reference rate would be on the agenda in upcoming meetings.

US Dollar Index (DXY) extends its gains for the second session, trading higher near 104.40 during the European hours on Wednesday. The 2-year and 10-year yields on US Treasury bonds stand at 4.59% and 4.22%, by the press time.

Atlanta Fed President Raphael Bostic anticipates only one rate cut this year, cautioning against premature reductions due to the potential for heightened disruption. Conversely, Chicago Fed President Austan Goolsbee aligns with the majority of the board, forecasting three cuts.

The US Dollar (USD) receives upward support from the prevailing market risk aversion ahead of the upcoming release of the US Gross Domestic Product Annualized on Thursday and Personal Consumption Expenditures (PCE) scheduled for Friday.