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Focus On US Inflation, Banxico Decision Thursday

MEXICO
  • USDMXN is pinned to the most recent lows ahead of the US CPI data amid broad greenback weakness to start the Wednesday’s session.
    • The reversal lower from 20.8335 signals scope for a deeper pullback and attention is on support at 20.2080, the Jul 29 low. This support continues to be tested and a clear break would strengthen bearish conditions and open the 20.00 handle.
  • Banxico are unanimously expected to raise the overnight target rate by 75bps from 7.75 to 8.50% at the August meeting.
  • Ongoing pressures to headline and core inflation, rising inflation expectations and the Fed’s hawkish stance all warrant a continuation of the aggressive pace of tightening.
  • Focus will be on any signals within the statement regarding the depth of the current cycle and whether a hike of the same magnitude can be expected in September.
  • President AMLO detailed plans to further deepen the military’s role in Mexican life, boosting efforts to bring the national guard under the control of the Defense Ministry.
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  • USDMXN is pinned to the most recent lows ahead of the US CPI data amid broad greenback weakness to start the Wednesday’s session.
    • The reversal lower from 20.8335 signals scope for a deeper pullback and attention is on support at 20.2080, the Jul 29 low. This support continues to be tested and a clear break would strengthen bearish conditions and open the 20.00 handle.
  • Banxico are unanimously expected to raise the overnight target rate by 75bps from 7.75 to 8.50% at the August meeting.
  • Ongoing pressures to headline and core inflation, rising inflation expectations and the Fed’s hawkish stance all warrant a continuation of the aggressive pace of tightening.
  • Focus will be on any signals within the statement regarding the depth of the current cycle and whether a hike of the same magnitude can be expected in September.
  • President AMLO detailed plans to further deepen the military’s role in Mexican life, boosting efforts to bring the national guard under the control of the Defense Ministry.