The Mexican peso weakened to around 17.04 per US dollar after touching a more than two-year low of 16.91 on August 21. A more restrictive policy signal from Fed Chair Warsh strengthened the dollar after he said the Federal Reserve was tracking the PCE index as its inflation gauge. His firmer language followed earlier suggestions that a newly created task force could change the central bank's preferred measure. Rate futures then shifted toward pricing a potential Fed rate hike next month, lifting US Treasury yields and pressuring emerging-market currencies including the peso. A US rate increase could narrow the US-Mexico interest-rate differential and reduce the appeal of Mexican assets. The Bank of Mexico is expected to hold its benchmark rate at 6.5% in the near term, with elevated energy prices sustaining inflation risks while improving economic activity provides a counterweight.