- USD/MXN is comfortably moving above $17.00 as the US Dollar remains resilient.
- The attractiveness of risk-sensitive currencies remains weak due to the upside risks of a global slowdown.
- Investors await Banxico’s interest rate decision, which will be announced next week.
The pair USD/MXN has moved its auction above the crucial resistance of 17.00 on Friday. The cross strengthens as the USD remains firm despite the Federal Reserve (Fed) announcing an unchanged interest rate decision on Wednesday as anticipated by market participants.
S&P 500 futures added some gains in the European session, portraying a relief in the market’s risk-averse state. The overall trend remains against the attractiveness of risk-sensitive currencies due to the upside risks of a global slowdown.
The US Dollar Index (DXY) remains directionless near a six-month high around 105.70 amid uncertainty over the interest rate peak. Fed policymakers offered a hawkish interest rate outlook at the Federal Open Market Committee (FOMC) meeting, hinting at a further 25 basis point (bp) interest rate hike, which will take the interest rates at 5.50%-5.75%.
Meanwhile, investors will focus on the release of S&P Global’s preliminary PMIs for September, due at 13:15 GMT. Manufacturing PMI is expected to improve marginally to 48.0 from 47.9 in August. For its part, the PMI for services, a sector that represents two-thirds of the US economy, would rise to 50.6 points from 50.5 in August.
As for the Mexican peso, investors are focused on the Bank of Mexico (Banxico) interest rate decision, which will be announced next week. The Mexican central bank has kept interest rates unchanged at 11.25% in the last three monetary policies.
Economists at Société Générale point out that strong growth results and progress in containing inflation have helped the MXN outshine the emerging currency complex this year. However, headwinds are mounting from currently rich valuations, changes in the developed market rate paradigm, and changes in national policies regarding monetary intervention.
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.
