USD/MXN gains traction above 18.00 amid USD demand, eyes on US ADP, Services PMI data

• USD/MXN attracts some buyers above the 18.00 area on Wednesday amid the stronger USD.
• US JOLTS Job Openings came in above expectations.
• The downbeat Mexican data exerts pressure on the Mexican Peso.
• Market players will monitor US ADP Employment Change and ISM Services PMI on Wednesday.

The US Dollar (USD) gains traction against the Mexican Peso (MXN) during the early Asian trading hours on Wednesday. The uptick of the pair is bolstered by the rally of the US Dollar, higher US Treasury bond yields, and the upbeat US data. USD/MXN currently trades around 18.07, up 0.03% on the day.

Meanwhile, the US Dollar Index (DXY), a measure of the value of the USD relative to a basket of foreign currencies, surges to 107.10 the highest level since November last year. The US Treasury yields also edge higher on Wednesday, with the US 10-Y yield staying at 4.83%, the highest level since 2007.

The US Bureau of Labor Statistics (BLS) revealed in the Job Openings and Labor Turnover Survey (JOLTS) on Tuesday that the number of job openings for August stood at 9.6M from 8.9M (revised from 8.8M) in the previous reading. The figure came in better than the expectation of 8.8 million by a wide margin.

On Tuesday, Cleveland Federal Reserve President Loretta Mester stated that she is likely to favor an interest rate hike at the next meeting if the current economic situation holds while mentioning that the Fed is likely at or near peak for interest rate target. Meanwhile, Atlanta Fed President Raphael Bostic said he will be patient and there is an urgency for us to do anything more.

On the other hand, Mexico’s S&P Global Manufacturing PMI for September came in at 49.8 from the previous reading of 51.2. The figure dropped to the contractionary territory and weighed on the Mexican Peso. Apart from the data, the Mexico's interest rates are expected to remain at 11.25%, according to a recent poll by Banxico,

Looking ahead, market players will monitor the US ADP Employment Change and ISM Services PMI due later in the Amercan session on Wednesday. The attention will shift to the highly-anticipated US Nonfarm Payrolls on Friday. These events could give a clear direction to the USD/MXN pair.