USD/MXN drops to fresh 4-month lows ahead of Banxico
|The Mexican peso is among the top performers on Wednesday in the currency market ahead of tomorrow’s Bank of Mexico meeting. USD/MXN is falling almost 1.50% today. The pair traded momentarily above 19.00 earlier today but then bounced to the downside. Recently reached 18.73, hitting the lowest level since the US Presidential elections (Nov 8/9).
Currently, it trades at 18.74, headed toward the lowest close in months. The bearish tone prevails in the pair, that since mid-March accelerated the downside, following the break of the 19.40 technical barrier.
Banxico eyed
On Thursday, most analysts expect Banxico to raise rates by 25 basis points. Rising inflation pushed the central bank to start a tightening cycle. Some analysts expect no move tomorrow taking into account that the peso has strengthened since January. Back then USD/MXN reached record highs levels on top of 22.00.
Analysts from TDS, expect a 25bp rate hike but they do not discount the possibility that Banxico would elect to not hike rates. “Though we believe this is ill-advised as it would be better policy execution and communication strategy (that would enhance market confidence) to hike 25bps more, and then change the communication strategy to indicate an end (or near to an end) in the hiking cycle”.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.