USD/MXN: 24-24.5 will be the dominant range – Rabobank

Banxico cut rates 50bp to 5.50%. Market reaction was fairly muted (albeit slightly MXN positive) given the decision was priced in, economists at Rabobank apprise.

Key quotes

“Banxico cut rates 50bp to 5.50% in a unanimous decision that was widely expected.” 

“We remain of the view that Banxico will cut rates to 4.50% this year but the risk is skewed to more rather than less rate cuts.”

“USD/MXN is currently trading in ‘no man’s land’ between 23 and 25 with positioning neutral. We expect 24-24.5 will be the dominant range but in order to break below 23 we would need carry trades to return and in order to attract MXN shorts above 25 we would need another event.”