19.70 Obstacle For Further USDMXN Weakness

{MX} Overall the news surrounding the Banxico Bill is still positive. Following changes that will ease concerns it could force the institution to take illicit funds, the bill will likely be passed in February. Lawmakers will hammer out details with central bank and finance ministry officials in January, clearing the way for the lower house approval the following month. If the bill is modified, the senate would have to hold a final vote before it becomes law.

In similar fashion, USDMXN should be driven by year-end flows and global sentiment with 19.70 the major obstacle for another leg lower in the pair.

TIIE swap rates were little changed yesterday; curve now pricing in around 37bps rate cuts by end-of-July. With Galia Borja taking her post in early January at Banxico, markets will look for clues as to whether this pricing is a conservative estimate given the potential reignition of the easing cycle.