- USD/MXN loses momentum near 16.77 amid weaker Dollar.
- Federal Reserve (Fed) Chairman Jerome Powell said additional rate hikes cannot be ruled out if necessary.
- Banxico authorities cited the possibility of further rate hikes to alleviate inflationary pressures.
- Markets will be watching Mexico’s GDP and US BC consumer confidence.
USD/MXN extends its downtrend during the early hours of the European session on Tuesday. The pair is currently trading around 16.77, losing 0.12% on the day. Meanwhile, the DXY Dollar Index, which measures the strength of the dollar against six other major currencies, is losing traction for the second day in a row. Market participants are waiting for the most important economic data from the US and Mexico’s Gross Domestic Product (GDP) for the second quarter to gain momentum.
Regarding the Jackson Hole Symposium, Federal Reserve (Fed) Chairman Jerome Powell stated that a further rate hike cannot be ruled out should it be required, this would be determined by incoming data. According to World Interest Rates Probabilities (WIRP), the market is pricing in modest odds for a September hike, but the probability of a 25 basis point (bp) hike in November has risen to nearly 70%. In terms of data, the Dallas Federal Reserve Manufacturing Index for August rose to -17.2 from -20 prior, better than the -21.6 estimate.
On the other hand, Banxico’s policy makers cited the possibility of additional rate hikes to ease inflationary pressures. This, in turn, boosts the Mexican Peso (MXN) against the US Dollar and acts as a headwind for USD/MXN. On the other hand, Mexico, the second largest economy in Latin America, will publish GDP data on Tuesday. The annual growth figure is expected to remain unchanged at 3.7%, while the monthly figure will grow by 0.9%.
Market participants will also be closely watching the US CB Consumer Confidence Index for August and JOLTs job vacancy data for July to be released later in the day. On Friday, the focus will be on the US Non-Farm Payrolls.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
