USD/MXN: Mexican Peso unlikely to suffer on earlier easing cycle from Banxico – ING
|The Mexican Peso (MXN) has started the year strongly. Today sees the release of December CPI data for Mexico. Economists at ING analyze Peso’s outlook ahead of Mexican inflation data.
December CPI should shed light on Banxico easing cycle
Any soft figure could shift expectations toward a Banxico first cut in February. Given implied MXN yields through the forwards in excess of 11%, we doubt an earlier easing cycle from Banxico has to hit the Peso.
However, we do feel it supports non-FX hedged positions in the short-end of the government bond market (MBONOs) and can probably see USD/MXN hanging around the 17.00 area rather than dropping down to last year's low near 16.60.
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