• Mexican Peso weakens in early North American trading as US Dollar gains strength.
• Mexican data is mixed though the economy finished 2023 on a higher note.
• Central bank divergence between Fed and Banxico could bolster USD/MXN pair.

The Mexican Peso depreciated in early trading during the North American session as the US Dollar climbed some 0.25%, based on the US Dollar Index (DXY). Speculation that the Bank of Mexico (Banxico) would ease policy on Thursday grew, while traders continued to trim odds for the Federal Reserve’s first rate cut. The USD/MXN trades at 16.87, clocking a gain of 0.28%.

Mexico’s economic docket featured the release of Aggregate Demand and Private Spending, with both figures exceeding Q3 2023 readings, suggesting the economy ended the year on a higher note. Across the border, US housing data exceeded estimates and improved compared to January’s data, and now all heads turn toward the Federal Open Market Committee (FOMC) decision on Wednesday.