Anna 
The USD/MXN pair continues its downward trajectory, hovering around 16.80 during the European session on Monday, driven by mixed employment data from the United States (US). The negative sentiment surrounding the US Dollar Index (DXY) contributes to the pair’s decline, fueled by growing expectations of a Federal Reserve (Fed) rate cut in June.
The CME FedWatch Tool indicates a 73.8% probability of a rate cut in June, reflecting a shift in market expectations. Federal Reserve Chair Jerome Powell has hinted at potential cuts in borrowing costs later this year, emphasizing that such decisions would be contingent on the inflation trajectory aligning with the Fed’s 2% target.
In February, the US Nonfarm Payrolls reported an addition of 275K new jobs, surpassing both January’s figure of 229K and market expectations of 200K. However, the US Average Hourly Earnings (YoY) saw a slight increase of 4.3%, slightly below the estimated and previous reading of 4.4%. Investor focus now turns to key economic indicators, including the Consumer Price Index data from the US scheduled for Tuesday, along with Retail Sales and Producer Price Index data expected on Thursday.
On the Mexican front, the 12-Month Inflation rate rose by 4.40% in February, marking a decline from the seven-month high of 4.88% in January and slightly lower than the forecasted 4.42%. Core Inflation recorded a higher increase at 0.49%, compared to the previous 0.40% rise. However, Headline Inflation saw a 0.9% rise, falling short of the expected 0.11% and the previous 0.89% increase. The upcoming policy meeting of the Bank of Mexico (Banxico) on March 21 is eagerly anticipated by market participants, adding to the overall sentiment influencing the USD/MXN pair.
