Banxico: No rate cut tomorrow, could signal a move at its next meeting  – Rabobank


According to analysts from Rabobank, the Bank of Mexico will keep rates unchanged tomorrow at 8.25% and they expect the statement to leave the door wide open for an inevitable rate cut. 

Key Quotes: 

“Of the 22 analysts surveyed by Bloomberg, 12 (including ourselves) are calling for no change, nine are calling for a 25bp cut and one is calling for a 50bp move. The front-end of the curve implies around a 25% chance of a cut this week, 60% in September and an 80% chance of a 25bp cut by November’s meeting. Our base case remains for a 25bp cut in November but there is now significant risk that Banxico signals a move at its next meeting on September 26th.”

“A rate cut can be justified and a rate cut is inevitable – the only question is the exact timing and that will depend on the Fed, domestic data and the currency. Of course, the first two factors scream ‘cut rates now’ with the Fed already reducing its policy rate 25bp in June with signs that more are to come (as noted, we expect two more 25bp cuts from the Fed this year alone), and domestic data continue to sour whether its investment, household consumption, or industrial activity, and inflationary pressures are easing. The latter factor, the currency, argues in favour of waiting as the weakening of MXN poses inflationary risks further out and although price pressures have slowed, inflation has been somewhat sticky and is still north of the Bank’s target (albeit within the tolerance band).”
 

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.

Feed news

Latest Forex News

Editors’ Picks

AUD/USD stays under pressure around 0.6830 while beginning the NFP day

AUD/USD declines to 0.6830 during the initial Friday morning in Asia. The quote stretches losses made on Thursday as the second-tier Aussie data becomes the latest disappointment.

AUD/USD News

USD/JPY steady at 200-DMA ahead of critical US NFP data

Steady below the 200-day moving average, USD/JPY fell from 108.97 to 108.66 overnight as positive trade  deal headlines flowed through the news wires and helped US stocks eke out further gains. Risk appetite was solid into the close on Wall Street overnight

USD/JPY News

US Non-Farm Payrolls November Preview: Labor market continues to defy concerns

Non-farm payrolls are predicted to rise 180,000 in Nov following Oct’s 128,000 increase. The unemployment rate is expected to be unchanged at 3.6%. Hourly earnings will gain 0.3% in Nov after October’s 0.2% increase and annual earnings will be stable at 3.0%.

Read more

Gold: Modestly changed to $1475 as markets turn cautious ahead of US NFP

Gold fails to extend the previous day’s recovery while trading near $1475/76 amid Friday’s Asian session. That said, the yellow metal registers failures to close beyond 50-day EMA for the third consecutive day.

Gold News

USD/JPY steady at 200-DMA ahead of critical US NFP data

Steady below the 200-day moving average, USD/JPY fell from 108.97 to 108.66 overnight as positive trade  deal headlines flowed through the news wires and helped US stocks eke out further gains. Risk appetite was solid into the close on Wall Street overnight

USD/JPY News

Forex MAJORS

Cryptocurrencies

Signatures