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MEXICO: USDMXN Yet to Close Below 50-day EMA, Banxico Minutes Due

MEXICO
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  • Lower-than-expected inflation data in Mexico and the push higher for US yields underpinned a grind higher for USDMXN on Wednesday and price action this morning has seen the pair consolidate a 1% rally on the week. Despite some tests below, spot has been unable to close below the 50-day exponential moving average, which may be assisting the latest recovery. We trade close to 19.50 as the key US inflation data approaches later today, as well as the Banxico minutes release at 1600BST/1100ET.
  • As a reminder, Deputy Governor Heath was the lone dissenter when the board voted 4-1 to cut the policy rate by 25bp to 10.50%. Market participants will be awaiting any discussion around the conditions that would validate an acceleration of the pace of rate cuts.
  • BBVA have noted the latest inflation developments suggest downward risks to their economists’ expectation that headline inflation will end the year at 4.8% YoY; however, due to the recent increase in oil prices and the likelihood that agricultural prices will rebound in the near term, they are maintaining their forecast for now. BBVA expect Banxico to continue cutting the policy rate in the last two meetings of the year.
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  • Lower-than-expected inflation data in Mexico and the push higher for US yields underpinned a grind higher for USDMXN on Wednesday and price action this morning has seen the pair consolidate a 1% rally on the week. Despite some tests below, spot has been unable to close below the 50-day exponential moving average, which may be assisting the latest recovery. We trade close to 19.50 as the key US inflation data approaches later today, as well as the Banxico minutes release at 1600BST/1100ET.
  • As a reminder, Deputy Governor Heath was the lone dissenter when the board voted 4-1 to cut the policy rate by 25bp to 10.50%. Market participants will be awaiting any discussion around the conditions that would validate an acceleration of the pace of rate cuts.
  • BBVA have noted the latest inflation developments suggest downward risks to their economists’ expectation that headline inflation will end the year at 4.8% YoY; however, due to the recent increase in oil prices and the likelihood that agricultural prices will rebound in the near term, they are maintaining their forecast for now. BBVA expect Banxico to continue cutting the policy rate in the last two meetings of the year.