USD/MXN treads waters above 18.0000 key level, awaits Fed policy decision
- USD/MXN gains ground despite solid Mexico’s GDP figures.
- Mexico's economy expanded at 0.9% in the third quarter compared to the 0.8% expected.
- Positive market sentiment contributes support for the US Dollar ahead of the Fed decision.
USD/MXN aims to continue the gains for the second successive day ahead of the policy decision by the US Federal Reserve (Fed). The spot price hovers above 18.0000 during the Asian session on Wednesday. Despite the positive Gross Domestic Product (GDP) data, the pair continues to strengthen amid geopolitical tension in the Middle East.
Mexico's economy expanded at 0.9% slightly above the market consensus of 0.8% in the third quarter between July and September, driven by domestic consumption and industrial activity. Moreover, during the previous week, Mexico’s Jobless Rate declined to 2.9% in September from August's 3.0%. Additionally, Mexico’s Trade Deficit widened in September from $1.377B in August to $1.481B.
The improved risk appetite supports the USD/MXN pair ahead of the Fed interest rate decision. The US Dollar Index (DXY) receives upward support from elevated US Treasury yields, bidding higher near 106.70 at the time of writing. The 10-year US bond yield stands at 4.91% by the press time.
The escalating Middle East conflict could reinforce the prices of Crude oil and Gold, which may provide minor support to the Mexican Peso (MXN).
Investors eagerly await the upcoming policy decision from the US Fed and indications suggest the central bank will likely maintain its current interest rate at 5.5% in the Wednesday meeting. Additionally, in the North American session, traders will closely monitor key indicators such as the US ADP Employment Change and ISM Manufacturing PMI for October.