The Mexican peso weakened for a second session, down 0.16%, while USD/MXN rose 0.20% to 18.72, with risk sentiment pressured by escalating US-Iran tensions and concerns that large technology groups are increasing debt issuance to fund AI spending. Saudi Arabia and the Houthis exchanged attacks, pushing energy prices higher and supporting the US dollar. Markets also tracked the interest-rate gap, with the Federal Reserve seen lifting rates by 25 bps towards the end of 2026, while Banxico is expected to leave policy unchanged in 2026 and through 2027.
Inflation and Economic Data Updates
In Mexico, headline inflation for the first half of October accelerated from 3.42% to 3.62%, above the 3.60% forecast, while core inflation eased from 3.79% to 3.78%, missing expectations of 3.70%. In the US, initial jobless claims for the week to 17 October fell to 194K from 200K, while the four-week average slipped to 197.75K.
Technical Indicators and Market Levels
On technicals, USD/MXN was at 18.7197, with the 50-, 100- and 200-day SMAs clustered near 17.54, the 14-day RSI at 73.87, resistance projected from 21.0808, and support also flagged near 16.89.
