Anna 
During Wednesday’s European trading hours, the USD/MXN pair retraced its recent losses observed over the past two sessions. The Mexican Peso (MXN) demonstrated strength ahead of the release of Jobless Rate and Trade Balance data from Mexico, pushing the USD/MXN pair higher to around 16.60.
INEGI’s Mexican economic activity indicator showed expansion, marking a rebound from a two-year low, albeit falling short of the estimated increase. This modest recovery suggests that the Mexican economy may be losing resilience against restrictive interest rates set by Banxico.
Banxico Governor Victoria Rodriguez Ceja maintained a dovish stance in a recent interview, emphasizing the ongoing battle against inflation. Rodriguez hinted at discussions regarding potential further rate cuts to the main reference rate in upcoming meetings.
Meanwhile, the US Dollar Index (DXY) continued its upward trajectory for the second consecutive session, trading near 104.40 during European trading hours. The yields on US Treasury bonds, particularly the 2-year and 10-year yields, stood at 4.59% and 4.22%, respectively.
Federal Reserve officials presented divergent views on future rate cuts, with Atlanta Fed President Raphael Bostic anticipating only one cut this year to avoid premature reductions that could cause disruptions. In contrast, Chicago Fed President Austan Goolsbee forecasted three cuts, aligning with the majority of the board.
The US Dollar (USD) benefited from prevailing market risk aversion ahead of key economic releases, including the US Gross Domestic Product Annualized on Thursday and Personal Consumption Expenditures (PCE) data scheduled for Friday.
