• Mexican Peso plunges over 1.51% as Dollar Index hits four-month high, fueled by Trump policy expectations.
• Banxico likely to cut rates by 25 bps, with core inflation nearing target, adding pressure on Peso.
• Mexico’s Consumer Confidence improves, while Banxico decision and US inflation data to shape USD/MXN trend.

The Mexican Peso depreciates at the beginning of the week against the US Dollar as the latter refreshes four-month highs, according to the US Dollar Index (DXY). Investor angst concerning a second Trump presidency and protectionists policies underpins the American currency, which is set to rise further. The USD/MXN trades at 20.46, gaining over 1.51%.

Risk appetite remains strong with Wall Street posting solid gains, which usually underpins risk-sensitive currencies like the Peso. Nevertheless, rumors of Robert Lighthizer’s appointment to lead US trade policy sparked fears among investors. Lighthizer was a major supporter of Trump’s Chinese tariffs during his first term.

Consequently, the DXY, which tracks the performance of the American currency against another six, has risen by 0.54% to 105.51.

In the meantime, Mexico’s economic docket revealed that Consumer Confidence in October improved. At the same time, Industrial Production figures were mixed ahead of the Bank of Mexico (Banxico) monetary policy decision.

Banxico is projected to lower borrowing costs by 25 basis points following last week’s inflation data, which witnessed core inflation dipping from 3.91% to 3.80% YoY, closing in on the 3% goal.

Earlier, Mexican President Claudia Sheinbaum said that she would renew an agreement with food producers and retailers to keep prices of basic groceries affordable for consumers, according to Reuters.

Ahead this week, Mexico’s schedule will feature the Banxico policy decision. On the US front, Fed speakers, inflation on the consumer and producer sides and Retail Sales will dictate the US Dollar’s path moving forward.