MXN: Cautious stance on rate cuts – Societe Generale

FXStreet Insights Team FXStreet

Societe Generale's report outlines the outlook for the Mexican Peso (MXN), indicating that Banxico is expected to maintain the policy rate at 7.00%. It highlights the central bank's cautious approach and the criticism it faces for lowering rates before achieving inflation convergence. The report also mentions a forecast for rate cuts later in the year, while noting the challenges for further appreciation of the peso.

Policy rate and inflation outlook

"Our house call is for 25bp cuts in 1H and 2H to 6.50% at year-end."

"Seasonal trends have historically supported the peso in February but further appreciation and a break below 17.00 LT ascending trendline going back to 2008 may prove challenging and dependent global de‑dollarization trades toward commodities."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

EUR/USD remains sidelined around 1.1600

EUR/USD clings to its decent gains on Monday and continues to move in a consolidative mood around the 1.1600 region. Improved risk appetite following the US-Iran agreement to reopen the Strait of Hormuz continues to weigh on the US Dollar, lending support to the risk complex. Looking ahead, investors are likely to remain on the sidelines ahead of Wednesday's FOMC meeting.

GBP/USD retreats from tops, back to 1.3420

GBP/USD keeps its advance past the 1.3400 yardstick at the beginning of the week. In the meantime, Cable continues to draw support from improved market sentiment following reports that the US and Iran have reached a framework agreement aimed at ending the conflict and reopening the Strait of Hormuz.

Gold stays firm, still below $4,400

Gold builds on its recent gains on Monday, climbing well north of the $4,300 mark per troy ounce. The yellow metal benefits from renewed selling pressure on the Greenback as investors reassess the implications of the US-Iran agreement to end hostilities and reopen the Strait of Hormuz. Market participants now turn their attention to Wednesday's FOMC gathering.