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Expiries for Oct21 NY cut 1000ET (Source DTCC)

US EURODLR FUTURES

BLOCKS, Red & Green Packs

FED

NY Fed Operational Purchase

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  • USDMXN has risen above the 20.00 mark to the highest level since September 1, extending the advance of the week's lows to just shy of 1%.
  • Next week the focus for the currency will undoubtedly be the Federal reserve decision/statement, however, Bi-weekly CPI will prove interesting as the next Banxico meeting looms on September 30.
  • Analysts had been tilting towards another rate hike from the bank amid the persistent inflation pressures, however, latest central bank rhetoric from the minutes may have tempered expectations for further tightening and increased the likelihood of a pause.
  • Risks relating to AMLO's energy initiatives and potential amendments to the constitution may come back into focus, with ongoing USMCA disputes another pipeline headwind for the MXN.
  • USDBRL was up close to 2% at one point during Friday trade. Heavy commodities (in particular iron ore), higher US yields and dampened risk sentiment all working against the local currency.
  • The local currency has recovered a good portion of the days losses with USDBRL up just a half a percent around 5.28.
  • As well as the FOMC, strong focus on the BCB rate decision next week where despite Governor Campos Neto tempering expectations for more aggressive action, some analysts are predicting a 125bps rate hike at the September 22 meeting.
  • The Copom decision and statement will precede Friday's release of mid-month IPCA inflation data where the annual headline rate is expected to rise once more to 9.95%, close to six-year highs for the metric.

Source: BCB