The Mexican currency has weakened after the central bank left the benchmark interest rate unchanged at the policy review on Thursday, weakening the upward correction from its recent record low.
It was the central bank's intervention that helped the 5.5% correction from its 11 March nadir of 15.67/dollar to the one-month high of 14.85 on Wednesday.
The USD/MXN pair jumped to 15.18 on Thursday, before easing to 15.14 by the end of the day, translating to a 1.0% decline in the peso. Early Friday, the pair continued to remain firm and traded at 15.18 helped by the stronger US dollar.
Thursday's better than expected US data and hawkish rhetoric by a senior Fed official aided the dollar rally putting additional downward pressure on the Mexican currency.
Initial jobless claims in the week to 20 March in the US was 282,000 less than 291,000 in the previous week and beating analysts' expectations of 290,000, data showed on Thursday.
In addition, the composite PMI measure by Markit rose to 58.5 for March from 57.2 in February while analysts had been expecting a drop to 57.0.
The Atlanta Federal Reserve president Dennis Lockart said on Thursday that the US economy is strong enough to start hiking rates after mid-year, providing another boost to the dollar bulls.
Market assumes that Mexico will be forced to hike rates as its big neighbour starts hiking rates later this year and that the Fed has been sounding in no hurry to hike rates soon has aided the hold decision by Banxico on Thursday.
But if upcoming US data underpins the need to hike sooner, then the downward pressure on the peso will increase along with pressure on the Mexican central bank to start hiking overnight target rate.
Banxico has been on an easing cycle since 2009 when the main rate was above 8%. It was brought down to 4.5% that year itself and then held there until 2013. At the start of last year the rate was 3.5% and that was slashed by 50 basis points in June taking it to the current level.
In the policy statement on Thursday the Mexican central bank said economic activity in the country has had a somewhat weak performance.
"Exports recorded slowdown at the beginning of the year, mainly due to a moderation in the pace of growth of manufacturing activity in the US. Additionally, we continue to observe a reduction in oil production platform, which has contributed to slower growth in the industrial production," Banxico said.
The market is now waiting for the final reading of US Q4 gross domestic product data due later in the day and also the Reuters/Michigan consumer confidence indicator for March.
Federal Reserve member Stanley Fisher will speak for some two hours before the GDP data at 12:30 GMT after which the focus will shift to the speech by Fed Chair Janet Yellen at 19:45 GMT. Yellen's remarks will, however, show its effect only on Monday.