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“We continue to see Banxico on hold at the upcoming meeting, but have pushed out our view for the beginning of the easing cycle to start in April of 2019,” TD Securities analysts note.

Key quotes

“While we don’t think that Banxico can afford to sound overly dovish at the current juncture, at least until inflation expectations come down, there is some chance that they begin to loosen the tether to the Fed’s policy path by  altering the prominence of the focus on U.S.-Mexico policy rate differentials, and increase the importance of growth risks or the potential output gap.”

“This is of   inor risk at this point however, and we expect the tone of the statement to be more in line with somewhat of an easing in forward-looking upside inflation risks. Thus a focus on less hawkishness rather than outright dovishness.”

FX:  We continue to see MXN as 8% to 10% undervalued, and continuing to offer obviously attractive carry. A positive resolution between the U.S. and Canada regarding NAFTA negotiations, currently still up in the air, could be very positive for MXN as it would remove remaining trade uncertainty.”