- Banxico cut rates by 25bps, again two board members asked for a bigger cut.
- Mexican peso erases losses versus US dollar, recovers from monthly lows.
The USD/MXN pair rose toward the 19.50 earlier today but then it turned to the downside and following the release of the statement from the Bank of Mexico it moved further lower. It dropped to 19.34, reaching a fresh daily low and it is about to end the day flat, away from the one-month high it hit yesterday at 19.52.
Latin American currencies remain under pressure. The Mexican peso was able until last week to remain steady but on Tuesday lost a key technical level, triggering more losses. The USD/MXN surpassed the 19.25/30 barrier, rising quickly to 19.50. Now the pair is consolidating in the new range. While a break above 19.50 would likely trigger more gains, a slide under 19.25 would remove the short-term bullish bias.
Banxico repeats September’s meeting
As mostly expected the Bank of Mexico cut the key interest rate by 25bps for the third consecutive meeting to 7.5%. Again the decision was not unanimous as two members (likely Heath and Esquivel) wanted a 50 bps cut.
The Mexican peso rose modestly following the decision. The central bank will likely continue the easing cycle taking into account inflation stands around the central bank’s 3% target, economic growth is below its potential and recent Fed rate cuts. How the Mexican peso performs over the next weeks could be a critical factor behind the next decision on whether it accelerates rate cuts or remains at the current speed.
Share
