Ella 
USD/MXN pulled back from its recent gains, trading as low as 18.0160 during Monday’s Asian session. USD/MXN faces challenges following the release of a weaker-than-expected preliminary reading of the U.S. Michigan Consumer Confidence Index.
Data for October released last Friday showed that the preliminary Michigan Consumer Confidence Index fell to 63.0 from the previous reading of 68.1, which was lower than the expected reading of 67.4.
However, USD/MXN has rallied over the past few sessions, which may be due to a change in the market’s discussion of the Fed’s policy path following a series of strong U.S. economic data last week, with U.S. inflation coming in higher than expected and initial jobless claims coming in lower than expected.
At the time of writing, the US Dollar Index is trading slightly lower at around 106.50. However, the market seems to be starting to focus on the prospect of the Federal Reserve (Fed) raising interest rates again in an effort to curb inflation.
In addition, a rebound in U.S. Treasury yields after recent declines could boost the dollar. U.S. Treasury yields rebounded on Monday, with the 10-year yield at 4.65%, up 1.0%.
In addition, as geopolitical tensions between Palestine and Israel intensified, the U.S. dollar continued to rise on safe-haven flows. An anonymous source told Reuters that U.S. officials are in talks with Israel about a possible visit by President Joe Biden to Israel. The invitation for the visit reportedly came from Israeli Prime Minister Benjamin Netanyahu.
Market participants are likely to focus on Tuesday’s U.S. Retail Sales data, which is expected to show a 0.2% increase in September from 0.6% in the previous month.
In Mexico, the recently released minutes of the central bank’s monetary policy meeting showed a hawkish outlook, with central bank members expressing reluctance to consider an interest rate cut in the near term.
