The Mexican Peso gears up for a busy calendar week. 

• The Bank of Mexico holds its policy meeting Thursday and major inflation data is out on Tuesday. 
• USD/MXN gains momentum as it rises back up within its ascending channel. 

The Mexican Peso (MXN) seesaws between tepid gains and losses in its major pairs on Monday, ahead of a week in which a raft of key economic data will be released and the Bank of Mexico (Banxico) will hold its September policy meeting on Thursday – all factors that could influence the Peso.

Mexican Peso to feel impact of data releases, Banxico meeting 

The Mexican Peso could be moved by domestic data releases and the Banxico policy meeting during the week ahead. 

On Monday, Retail Sales for July will be released at 12:00 GMT. The data for June showed a 3.9% fall YoY and a 0.5% decline MoM. If the new data shows an improvement in consumer spending, it could support the Peso. 

On Tuesday, 1st half-month inflation and core inflation for September will hit the wires at 12:00 GMT. The previous data showed a 0.03% decline in inflation and 0.1% rise in core inflation. If the new figures are higher, they could influence the Banxico decision on Thursday. Higher inflation will increase the probability that the central bank will keep interest rates high and vice versa for lower inflation. 

On Thursday, Banxico will hold its policy meeting and could decide to adjust its key interest rate, currently at 10.75%. Most economists think the bank will cut by 0.25%, bringing it down to 10.50%. The expectation of lower interest rates is generally negative for a currency since it lessens foreign capital inflows. 

At the August meeting, Banxico decided to cut interest rates by 0.25% (25 bps), bringing its official rate from 11.00% to 10.75%. The decision was a close call, with only three members voting for the cut versus two who wanted to keep rates where they were.