• Mexican Peso falls to seven-week low as trade deficit hits worst level since August 2020.
• INEGI data shows Mexican exports and imports plunged, with exports contracting 5.7% YoY.
• Upcoming US economic reports and FOMC decision expected to keep USD/MXN rally alive.

The Mexican Peso depreciated sharply as the week began after data revealed Mexico’s Balance of Trade deficit widened — its worst reading since August 2020, according to data revealed by the Instituto Nacional de Estadistica, Geografia e Informatica (INEGI). This, along with the strength of the US Dollar, keeps the USD/MXN trading at 18.67, gaining more than 1.20%.

INEGI revealed that Mexico’s Exports and Imports plunged, though the former contracted -5.7% YoY, the steepest drop in 46 months. The data weighed on the Mexican Peso, which weakened to a seven-week low as the USD/MXN accelerates toward testing the year-to-date (YTD) high of 18.99.

The US economic docket will be busy. Market participants prepare for the Federal Open Market Committee (FOMC) monetary policy decision, the release of the Institute for Supply Management (ISM) Manufacturing PMI, and the Nonfarm Payrolls (NFP) report, both figures for August and July, respectively.