Banxico Preview: Unlikely to signal imminent rate hikes, USD/MXN to hover between 19.80-20.60 – Rabobank

Banxico will announce its latest rate decision on Thursday, June 24 and both analysts and traders are united in their expectation of no change in the 4% policy rate. Rabobank’s USD/MXN forecast is unchanged at 20.50 during Q3 and the Dutch Bank maintains its trading range of 19.50 to 21.0 with a bias towards the 19.80 to 20.60 region.

Forecast for USD/MXN remains unchanged

“Banxico will announce its latest rate decision on Thursday, June 24 and we expect the Bank to leave rates on hold at 4.00%. This is expected by analysts and traders alike. We expect a unanimous decision.”

“The last meeting saw a more hawkish shift as Banxico switched from suggesting that the balance of risks to inflation is uncertain, to stating that the balance of risks is now skewed to the upside. That said, the tone tempered any expectations of near term rate hikes. We maintain the view that Banxico will not raise rates this year but will wait until 2022.”

“We have long been highlighting a trading range of 19.50 to 21.0 with a bias towards the 19.80 to 20.60 region and our point forecast sat at 20.5 for today and the next two months. Although the risk is now skewed to the upper end of the range, we still trading will persist within these boundaries in Q3.”