Peso Retreats as USD/MXN Bounces from Near YTD Low Amid Fed Hike Expectations
The Mexican Peso (MXN) has retreated against the US Dollar (USD) after hitting its yearly low of 17.10, as USD/MXN rose by over 0.09% in a sour market mood and stronger Greenback ahead of the FOMC monetary policy decision on Wednesday.
The latest inflation report from the United States pushed investors to price in a Federal Reserve (Fed) rate hike on Wednesday, despite most data being in line with forecasts.
With headline PPI jumping to 5.4%, alongside strong August Nonfarm Payrolls and Fed Chair Kevin Warsh confirming that the labor market is 'consistent with full employment', the case for moving the Fed funds rate to 3.75%-4% has been cemented.
The escalation of the Middle East conflict, which pushed energy prices higher and Oil above $100, may also be a reason for the Fed's consideration of a pre-emptive rate hike.