Mexican Peso roars back as Mexico's GDP surprise pushes USD/MXN lower

The Mexican Peso (MXN) experienced a rebound against the US Dollar (USD) at the start of the week, following robust GDP figures released last Friday. USD/MXN traded at 18.56, down 1.17%, as traders awaited the U.S. election results and the latest ISM Manufacturing PMI report. Mexico's GDP expanded by 0.9% quarter-over-quarter (QoQ), exceeding expectations of 0.7% growth but lagging behind Q2's 1.4% increase.

On an annual basis, Mexico's economy grew by 3.2%, surpassing economists' predictions of 2.5%. Mexican Finance Minister stated that growth could reach the upper limit of government forecasts if momentum persists. In the U.S., the ISM Purchasing Managers' Index (PMI) rose to 55.5 in October, surpassing expectations of 54.6, though the odds of a 25-basis-point rate hike decreased from 80% to 77%.

Traders focused on the U.S. mid-term elections, where Democrats held a 75% chance of seizing control of the Senate and a 96% probability of securing the House of Representatives. Technical analysis indicated a bullish near-term bias, with the pair pushing past key resistance levels and the 14-day Relative Strength Index approaching 58.6.

Key factors influencing the MXN include the Mexican economy, central bank policies, foreign investment, remittances, geopolitical trends, oil prices, and Banxico's pursuit of low and stable inflation close to its 3% target.