• Mexican Peso rises to a three-week peak as US Dollar drops.
• Fed rate cut expectations increase with CME FedWatch Tool showing a 43% chance of a 50 bps cut, pressuring the US Dollar.
• Political concerns in Mexico ease following the approval of the judicial reform, helping the Peso's rally.

The Mexican Peso rallied for the third straight session against the US Dollar due to overall weakness on the latter. Market participants gaining confidence that the US Federal Reserve (Fed) will lower borrowing costs “aggressively” boosted the Mexican currency, which shrugged off judicial reform fears. The USD/MXN trades at 19.25, down 1.30%.

The Greenback has been the focus during the last two trading sessions. On Thursday, investors seemed confident that the Fed will cut interest rates by 0.25% due to data provided by the CME FedWatch Tool. Nevertheless, a worse-than-expected Initial Jobless Claims report overshadowed an uptick in the Producer Price Index (PPI).

On Thursday, the CME FedWatch Tool showed that the odds for a 50-basis-point Fed cut were 28%. However, at the time of writing, the chances increased to 43%; and for a 25 bps cut, diminished to 53%.

This undermined the buck, which, according to the US Dollar Index (DXY), lost 0.17%, changing hands at 101.06.

The University of Michigan (UoM) revealed that Consumer Sentiment rose to a four-month peak in September, which was helped by an improvement in inflation expectations.