Anna 
The USD/MXN pair extends its losing streak that commenced on February 29, reaching close to 16.90 during the European session on Wednesday. The decline in the US Dollar (USD) is attributed to an enhanced risk appetite.
The softness in the US Dollar is further fueled by the release of the softer-than-expected ISM Services Purchasing Managers Index (PMI), which decreased to 52.6 from the previous 53.4, falling below the anticipated 53.0 in February. Additionally, Factory Orders (MoM) witnessed a more substantial decline of 3.6% in January, exceeding the expected 2.9%.
Market focus remains on Federal Reserve (Fed) Chairman Jerome Powell’s testimony before the US Congress’ House Financial Services Committee, along with the upcoming ADP Employment Change report for February. According to the CME FedWatch Tool, there is a 4.0% probability of a 25 basis points rate cut in March, with higher probabilities of cuts in May (23.9%) and June (53.3%).
On the Mexican front, a Reuters poll indicates that 15 analysts expect a slowdown in February inflation, reinforcing expectations of a potential rate cut by the Bank of Mexico (Banxico) at its March 21 meeting. Investors anticipate a 75 basis points reduction in the next six months.
Monday’s data revealed a 13.4% year-on-year growth in Mexico’s Gross fixed investment in December 2023, down from the previous month’s 19.2% rise. Consumer confidence data is scheduled for release on Wednesday, followed by inflation data on Thursday.
