Mexican Peso Weakens on Fed Rate Hike Bets Amid Strong US Inflation Data
The Mexican Peso (MXN) weakened against the US Dollar on Wednesday as traders became more confident that the Federal Reserve will raise interest rates by the end of the year. The USD/MXN pair traded at 16.95, after reaching a daily low of 16.92.
The strengthening dollar was driven by the latest Core PCE reading, which came in line with estimates and matched June's reading of 3.3% YoY. This increased the chances of higher interest rates in the US, as money markets had already priced in a 74% chance of a 25-basis-point (bps) rate hike at the July meeting.
The Bank of Mexico (Banxico) released its Quarterly Report for Q2 2026, which updated forecasts for several economic indicators. Banxico expects GDP to rise from 1.1% to 1.5%, and headline inflation is projected to converge to the 3% goal by Q4 2027.
US Durable Goods Orders rose by 1.1% in July, exceeding forecasts and June's 0.5% reading, boosted by transportation equipment.