Ella 
USD/MXN remained negative for a fourth consecutive session around 18.60 during early European trade on Friday. USD/MXN fell further on expectations that the U.S. Federal Reserve will cut interest rates by at least 25 basis points in September. Investors will be focused on preliminary U.S. consumer confidence index for August, building permits and housing starts due later on Friday. In addition, Federal Reserve official Austan Goolsbee will also give a speech.
Upbeat U.S. economic data on Thursday, including jobless claims and retail sales, eased concerns about a potential U.S. recession. However, traders still expect the Federal Reserve to cut interest rates in September, which is weighing on the dollar in the short term. Market expectations for a 25 basis point rate cut by the Fed in September are now fully priced in, with expectations for a 50 basis point rate cut near 20%, according to the CME Group’s FedWatch tool.
The gains in the Mexican peso came despite a surprise rate cut by Mexico’s central bank (Banxico) last week, cutting interest rates by 25 basis points to 10.75% from 11%. Alexis Milo, a Mexican economist and former chief economist at HSBC Mexico, said: “The U.S. market had its best day in more than a year, which allowed the peso to recover. The impact exceeded the interest rate cuts we expected. depreciation”.
