13 May 2015
Banxico could hike in Q3 – Rabobank
FXStreet (Edinburgh) - Strategist Christian Lawrence at Rabobank, believes the Mexican central bank to hike rates in the third quarter.
Key Quotes
“We have noted the impact of falling oil prices on MXN but the rebound in oil didn't trigger a sustained reversal in MXN and instead we suggest that broader LatAm weakness weighed on MXN overriding the positive impact of rising oil”.
“In this respect, EM currency weakness could hurt MXN on the back of its role as a proxy hedge for the region”.
“Banxico has been explicit in citing fears of outflows heading north of the border and we expect the Bank to try and get ahead of the curve by announcing a 50bp hike to 3.50% in Q3 ahead of the Fed rate hike which we expect to see in December”.
“If that happens, USD/MXN is likely to trade with a 14 handle but in the very short term a 15.10-60 range is more likely”.
Key Quotes
“We have noted the impact of falling oil prices on MXN but the rebound in oil didn't trigger a sustained reversal in MXN and instead we suggest that broader LatAm weakness weighed on MXN overriding the positive impact of rising oil”.
“In this respect, EM currency weakness could hurt MXN on the back of its role as a proxy hedge for the region”.
“Banxico has been explicit in citing fears of outflows heading north of the border and we expect the Bank to try and get ahead of the curve by announcing a 50bp hike to 3.50% in Q3 ahead of the Fed rate hike which we expect to see in December”.
“If that happens, USD/MXN is likely to trade with a 14 handle but in the very short term a 15.10-60 range is more likely”.