The Mexican Peso loses ground against the US Dollar on Wednesday as risk appetite turns sour amid the escalation of the Gulf War, while traders await the Federal Reserve’s monetary policy decision.
The USD/MXN trades at 17.51, up 0.47%
USD/MXN rises as Middle East tensions boost crude, revive Fed hike risks Sentiment deteriorated after Iran launched attacks on US assets within the Gulf States. The White House responded as the US President Donald Trump said that talks with Iran will continue but added that “we’ll be hitting Iran hard.” The backdrop pushed Oil prices higher, with West Texas Intermediate, the US crude benchmark, rising nearly 7% at $84.62. A scarce economic docket keeps traders laser-focused on the Federal Reserve’s monetary policy decision.
The Fed is expected to keep rates unchanged due to softer June inflation data and a resilient labour market. However, crude prices are almost 20% above June’s closing price, making it tougher to achieve back-to-back positive inflation readings. Analysts at Wells Fargo speculate that the Fed Chair Kevin Warsh could influence the board to delay rate hikes, as they assess incoming data.