USD/MXN gains ground above the 17.00 area amid USD strength

• USD/MXN holds positive ground above 17.15, close to the weekly high.
• The FOMC Minutes indicated significant inflationary risks, and an additional tightening of monetary policy may be required.
• The US Initial Jobless Claims, Philadelphia Fed Manufacturing Survey, Mexican Retail Sales will be in focus.

USD/MXN gains momentum above the 17.00 area amid the firmer US dollar (USD) broadly. The FOMC Minutes suggest the possibility of a further tightening cycle from the Federal Reserve (Fed), and it boosts the Greenback to the highest level since June, above 103.50. The pair currently trades near 17.1730, up 0.22% on the day.

That said, the Mexican Peso weakened against the US Dollar following the release of FOMC Minutes. The report emphasised that inflation remained unacceptably high. Additionally, the Fed official saw significant inflationary risks, and it may need additional tightening of monetary policy to bring inflation to the longer-run target. This, in turn, weighs on the Mexican Peso and acts as a tailwind for the USD/MXN.

Furthermore, the upbeat US data is another driver for the Dollar strengthen. US Industrial Production rose 1.0% in July, better than market expectations of 0.3% and a prior decrease of 0.8%. In July, Building Permits increased from 1.44 million to 1.44 million, while Housing Starts increased from 1.39 million in June to 1.45 million, above expectations of 1.48 million. Both the Change in Building Permits and the Change in Housing Starts exceeded both market expectations and prior readings.

Moving on, traders will keep an eye on the US weekly Initial Jobless Claims and the Philadelphia Fed Manufacturing Survey for August, due later in the day. Also, the Mexican Retail Sales data for June will be released on Friday. The annual Retail Sales data is expected to rise by 2.9%, while the monthly figure is expected to grow by 0.9%. The data will be critical for determining a clear movement for the USD/MXN.