• Mexican Peso tumbles following Trump’s appointments of Mike Waltz and Marco Rubio.
• Banxico expected to cut rates by 25 bps amid heightened US-Mexico tensions.
• Upcoming US inflation and Retail Sales data to impact USD/MXN currency pair.

The Mexican Peso extends its losses against the Greenback on Tuesday on risk aversion due to US President-elect Donald Trump’s first appointments to his cabinet. Trump’s campaign proposals of increasing tariffs and lowering taxes are inflation-prone, which would exert pressure on the Federal Reserve (Fed) to keep rates higher than otherwise. At the time of writing, the USD/MXN trades at 20.62, gaining 1.38%.

Risk aversion due to Trump’s naming Mike Waltz as National Security Advisor and Marco Rubio as Secretary of State hurt the prospects of the Mexican currency, which has tumbled over 2% since Monday. Waltz and Rubio are known for their tough stance on China, hinting that tariffs would likely be imposed.

Mexico’s economic schedule remains absent, though USD/MXN traders are eyeing the Bank of Mexico (Banxico) monetary policy decision on November 14. According to Reuters, 19 of 20 economists expect a 25-basis-point (bps) rate cut to the main interest reference rate, pushing it down to 10.25%.

On Monday, Mexico’s Secretary of Economy Marcelo Ebrard suggested that the Mexican government could retaliate with its own tariffs on US imports. He stressed that tariffs would increase prices in the US.

Recently, Fed officials had crossed the wires. Governor Christopher Waller failed to comment on monetary policy. Contrarily, Richmond Fed President Thomas Barkin stated that “Inflation might be coming under control or might risk getting stuck above the Fed's 2% target.”

Ahead this week, Mexico’s economic docket 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 USD/MXN pair direction moving forward.