USD/MXN to primarily trade within a 19.50 to 21.0 range – Rabobank

After Thursday’s Banxico meeting, analysts at Rabobank still expect the USD/MXN pair to primarily trade within a 19.50 to 21.0 range with a bias towards the 19.80 to 20.60 region. The central bank kept rates unchanged as expected at 4%. Analysts argue the overall tone of the statement can be described as neutral, but there is undoubtedly a more hawkish stance relative to March’s statement.

Key Quotes: 

“We maintain the view that Banxico will remain on hold at 4.00% for the remainder of this year.”

“Banxico was notably more hawkish, while also playing down the possibility of imminent rate hikes. It is a difficult tightrope to walk, but the statement was somewhat of a masterclass in how it can be done. Banxico is in wait-and-see mode along with so many other central banks round the world as they try and discern whether the current rise in inflationary pressures is likely to prove transitory or more persistent.”

“USD/MXN momentum was firmly skewed to the downside heading into the decision with the pair dropping around 1.5% from a high of 20.21 to 19.91 at the time of writing. We remain of the view that Banxico will leave rates on hold at 4.00% throughout this year. We expect USD/MXN to primarily trade within a 19.50 to 21.0 range with a bias towards the 19.80 to 20.60 region.”