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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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Free AccessMNI Banxico Preview - Sep 2023: Further Progress On Inflation Required
MNI Banxico Preview - September 2023
Executive Summary
- All analysts are expecting Banxico to keep the overnight rate unchanged at 11.25%.
- This is in line with the current guidance from the committee that it “will be necessary to maintain the reference rate at its current level for an extended period” in order to achieve a convergence of inflation to the 3% target.
- The persistence of above-target inflation, and particularly for core metrics, should reinforce the cautious tone of the committee, while staying committed to its data dependent stance at this juncture.
Click to view the full preview:
MNI Banxico Preview - September 2023.pdf
Governor Rodriguez Reiterates Monetary Easing Not Yet On The Table
During a presentation of the bank’s quarterly report on August 30, Banxico Governor Victoria Rodriguez stated that it’s important to remember that disinflation periods are not linear and that interest rate cuts in Mexico are “still not on the table”.
Indeed, Deputy Governor Jonathan Heath took to social media to reiterate his hawkish views, stating that Mexico’s core inflation data is “good news” but it still has a “long way to go”. For reference, he has previously highlighted that although he does not believe it is necessary to have more restrictive monetary policy, the board need to maintain current policy to ensure additional pressures do not materialise.
Short-Term USDMXN Outlook Turns Bullish
The short-term outlook for USDMXN has turned bullish amid the ongoing rally for the USD index, upward pressure on US yields and the most recent rolling over for major equity indices. The recent bear cycle between Sep 7 - 20 still appears to be a correction. Price recently traded through an important resistance at 17.4280, the Aug 4 high. The daily close above 17.4280 confirmed a double bottom reversal pattern on the daily chart. If correct, this price development signals scope for a climb towards 17.9292 next - 50.0% of the Mar 20 - Jul 28 downleg. On the downside, a resumption of weakness would signal scope for a steeper pullback towards major support that lies at 16.6262, the Jul 28 low.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.