• Mexican Peso continues to weaken, recording losses for three consecutive days amid increasing risk aversion.
• Fed Governor Waller supports the recent 50 bps rate cut, pointing to easing inflation and hinting at further cuts if labor conditions deteriorate.
• Banxico anticipated to lower rates by 25 bps next week, potentially sustaining an appealing interest rate differential to support the Peso.

The Mexican Peso extended its losing streak against the Greenback to three consecutive days, with the currency set to sustain weekly losses. Risk aversion hurts the Peso's prospects, which hasn’t been able to capitalize on the Federal Reserve’s (Fed) decision to lower rates for the first time in four years. This exerts pressure on the US Dollar, but the USD/MXN remains firm and trades at 19.38, printing gains of over 0.42%.

Wall Street reversed course on Friday as traders digested the decisions of three major central banks, particularly the Fed. Fed Governor Christopher Waller said on CNBC that cutting 50 basis points was right, justifying its decision based on estimates that the August Personal Consumption Expenditures Price Index (PCE) will be very low.

Waller added that inflation is softening faster than he thought and is concerned about that. He stated that they could do more if the labor market worsens and if the inflation data softens quickly.

South of the border, Mexico’s economic docket is scarce, and traders are eyeing next week with the release of Economic Activity, Retail Sales, inflation data, and the Bank of Mexico (Banxico) monetary policy decision.

Meanwhile, traders are eyeing Banxico’s decision. Most analysts estimate a rate cut of at least 25 basis points from 10.75% to 10.50%, which would reduce the interest rate differential slightly. It should, however, will remain attractive to investors and boost the Mexican currency.