Ella 
USD/MXN is gaining momentum above the 17.00 area amid broad-based USD strength. The minutes of the Federal Reserve meeting showed that the Federal Reserve (FED) is likely to tighten monetary policy further, which pushed the dollar to its highest level since June, above 103.50. USD/MXN is currently trading around 17.1730, up 0.22% on the day.
Nonetheless, the Mexican peso weakened against the dollar after the release of the Fed minutes. The report highlights that inflation remains unacceptably high. In addition, Fed officials believe that there is a huge risk of inflation and that further tightening of monetary policy may be required to bring inflation to its long-term target. This in turn weighed on the MXN and acted as a tailwind for USD/MXN.
In addition, strong U.S. data is another driver of dollar strength. U.S. industrial production rose 1.0% in July, beating market expectations for a 0.3% increase and the previous reading for a 0.8% decline. Building permits rose to 1.44 million in July from 1.44 million, while housing starts rose to 1.45 million from 1.39 million in June, beating expectations for 1.48 million. Changes in building permits and changes in housing starts both exceeded market expectations and previous values.
Next, traders will keep an eye on weekly U.S. initial jobless claims and the Philadelphia Fed manufacturing survey for August. Elsewhere, Mexican retail sales data for June will also be released on Friday. Retail sales are expected to rise 2.9% on the year and 0.9% on the month. This data is crucial for determining USD/MXN.
