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CIBC Believe Carry Remains Key Story Underpinning MXN

MEXICO
  • According to CIBC, attractive carry is dominating the overall positive sentiment on the peso and they continue to favour selling USD/MXN spikes in the short term.
  • On monetary policy, CIBC expect Banxico to still cut rates by 100bps for the remainder of the year, nevertheless, the government continues to increase spending ahead of the Presidential election, keeping concerns with regards to the sticky core services CPI alive in the immediate term.
  • CIBC await Banxico's monetary policy report two weeks from now for any update on the committee’s guidance, however with cleaner MXN positioning and lower vols, carry is the main story.

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