USD/MXN: Surprise in Mexican GDP release to the downside to pummel the peso – Commerzbank
|The expectations for today’s publication of Mexican growth in Q1 are not exactly breathtaking. Economists at Commerzbank expect weak data to reduce Banxico’s rate hike expectations and weigh on the peso.
Slow start into the year to intensify Banxico's dilemma in the fight against inflation
“The analysts polled by Bloomberg (consensus) expect a rise of 1% QoQ on a seasonally adjusted basis: the economy stagnated during the previous quarter and thus remained below pre-pandemic levels. Consensus YoY expectations stand at 1.6%, following 1.1% in the previous quarter.”
“The Mexican central bank had reduced its growth projections in its last quarterly report. It expects growth of 2.4% for the current year, which will rise slightly to 2.9% for 2023. This seems too optimistic when measured against Bloomberg consensus expectations of 2% and just above for this year and next.”
“A slow start into the year is likely to intensify Banxico's dilemma in the fight against inflation, which has shot up to above 7%. A significant surprise in the GDP release to the downside today might cause some to reduce their rate expectations for Banxico and would weigh on the peso.”
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