• USD/MXN retraces recent gains post Banxico’s meeting minutes.
• US headline inflation surpassed the expectations; while jobless claims printed a lower reading than expected.
• The recent barrage of positive US data has ignited discussions about the Fed’s interest rate trajectory.

USD/MXN pulled back from the recent gains that registered on Thursday, trading lower around 17.9430 during the Asian session on Friday. The pair is receiving downward pressure due to the hawkish monetary policy minutes from Mexico’s central bank Banxico.

The recent release of Banxico's monetary policy minutes paints a hawkish picture, with members expressing a reluctance to consider a rate cut in the near term. The consensus among members is a belief that rates should remain higher for an extended duration.

The primary rationale cited for this stance is the elevated prices observed in the services segment, which is identified as a key factor influencing inflation data. This hawkish sentiment underscores a cautious approach to monetary policy, prioritizing the need to address inflationary pressures.

However, the pair advanced in the previous session due to the optimistic economic data from the United States (US).

The Consumer Price Index (CPI) in the US, as revealed by the US Bureau of Labor Statistics (BLS), exceeded expectations in September, with annual figures expanding consistently at a rate of 3.7%, slightly surpassing the estimated 3.6%.

Furthermore, the Initial Jobless Claims for the week ending on October 6 exhibited a nuanced trend. Despite a modest increase of 209K, the figure was slightly below the forecast of 210K, indicating a subtle easing.

On Thursday, the data showed that the US Producer Price Index (PPI) surged in September on a yearly basis, jumping from 2.0% to 2.2%, Core PPI climbed to 2.7% from the anticipated easing to 2.3%.

The recent barrage of positive economic data has ignited discussions about the potential trajectory of the Federal Reserve's (Fed) monetary policy. The upbeat indicators have added a layer of complexity to the ongoing narrative, prompting speculation about the Fed's response.

Looking ahead, market participants are expected to keep a close eye on the US Michigan Consumer Sentiment Index, scheduled for release on Friday. This index often serves as a gauge of consumer confidence, providing insights into the broader economic sentiment.