Ella 
USD/MXN aims to regain recent losses and was trading around 18.2500 during the Asian session on Monday. The pair moved higher on rising risk aversion triggered by the Israel-Hamas military situation.
Fed officials had mixed comments on the path of interest rates, which could weigh on USD/MXN. Atlanta Fed President Raphael Bostic said the Fed is unlikely to cut interest rates before the middle of next year, while Philadelphia Fed President Patrick Harker expressed a preference for keeping rates on hold.
In addition, Federal Reserve (FED) Chairman Jerome Powell clarified last week that the central bank does not plan to raise interest rates immediately, emphasizing that further tightening of monetary policy may be based on signs of economic growth.
The U.S. Dollar Index (DXY) is trading higher near 106.30. Supporting this upward move is good momentum in U.S. Treasury yields, with the 10-year Treasury yield at 4.96% at press time, up 0.96%.
U.S. initial jobless claims fell to 198,000 in the week ended Oct. 14, below market expectations of 212,000. This is the lowest level since January and indicates a positive trend in the job market.
However, the September existing home sales change showed a 2.0% monthly decline, while existing home sales improved to 3.96 million units.
The U.S. unemployment rate was 3.6% in September, beating expectations of 3.7%. These data provide us with insights into the current state of the U.S. labor market and housing industry.
Additionally, sluggish retail sales in Mexico could weaken the Mexican peso (MXN). Mexico’s retail sales fell sharply at a monthly rate of 0.4% in August, missing expectations of 0%. Annual growth was 3.2%, below forecasts of 4.4% and lagging July’s 5.1% growth.
Last week, Banxico Deputy Governor Omar Mejia reiterated that the balance of inflation risks has not worsened. Mejía stressed that current restrictive monetary policy is effectively managing inflation, which he expects will be consistent with the Bank of Mexico’s target by the second quarter of 2025.
Investors are likely to focus on Tuesday’s U.S. S&P Global Purchasing Managers’ Index (PMI) and Thursday’s third-quarter gross domestic product (GDP). Additionally, Mexico’s trade balance data will be released on Friday. These key indicators have the potential to have a significant impact on market sentiment and provide valuable insights into the broader economic landscape of the United States and Mexico.
