Banxico Preview: The only way is down – Rabobank

Economists at Rabobank expect Banxico to cut the policy rate 50p to 5.50% on Thursday, May 14th. USD/MXN is trading at 24.261.

Key quotes

“We expect Banxico to cut the policy rate 50bp to 5.50% on Thursday,  May14th. We still see Banxico continuing to cut rates until 4.50% is reached.”

“Our fair value model still points to USD/MXN at 22 but a downward extension below there would require carry trade flows and instead we remain of the view that the pair will primarily trade a 23-25 range with a bias around the 24.5 handle.”