Anna 
During the early European hours on Friday, USD/MXN continues its upward trajectory for the second consecutive day, nearing 17.10. The pair is finding support from softer data in Mexico and mixed figures from the United States (US) released on Thursday.
In Mexico, 1st half-month Inflation for February declined by 0.1%, contrary to the expected 0.15% rise and the previous growth of 0.49%. The 1st half-month Core Inflation grew by 0.24%, missing the expected 0.28% and slightly below the prior figure of 0.25%.
INEGI reported that the Mexican Gross Domestic Product (QoQ) increased by 0.1% in the fourth quarter of 2023, meeting expectations but lower than the previous growth of 1.1%. The annual report showed a 2.5% increase, slightly exceeding the expected 2.4% and lower than the 3.3% prior.
The US Dollar Index (DXY) hovers near 103.90, supported by higher US yields, standing at 4.72% and 4.32% for 2-year and 10-year US Treasury bonds, respectively. Additionally, the USD received support on Thursday from robust US labor data, serving as a tailwind for the USD/MXN pair.
According to the US Bureau of Labor Statistics (BLS), weekly Initial Jobless Claims fell below consensus expectations, with figures declining to 201K for the week ending on February 16, lower than the market’s anticipation of 218K and the previous figure of 213K.
Hawkish remarks from US Federal Reserve officials, emphasizing the avoidance of interest rate cuts in the near term, could further reinforce support for the US Dollar. Federal Reserve Governor Christopher J. Waller stated that the initiation of policy easing and the number of rate cuts will depend on incoming data, with the Committee prepared to wait a little longer before considering monetary policy easing.
Participating in a moderated discussion at a Conference hosted by Princeton University in New Jersey, Federal Reserve Governor Lisa D. Cook remarked that risks to achieving employment and inflation goals have moved into better balance. She expressed a preference for greater confidence that inflation is converging to 2.0% before initiating rate cuts, acknowledging that the policy rate will eventually need adjustment as the disinflation outlook becomes more sustainable.
