FXStreet (Edinburgh) – The FX Strategy Team at TD Securities sees the Mexican currency responding to events overseas rather than domestic developments.
Key Quotes
“Mexican growth has continued to disappoint, and we do not expect any improvement over the rest of this year. We are forecasting 2015 GDP growth of 2.5%”.
“Reforms in the energy and telecoms sectors will bring significant benefits to the Mexican economy, increasing foreign investment and ultimately raising output. But this year they will not have a significant impact on growth”.
“The current inflation outlook looks benign, but we think that Banxico will have little option but to hike rates in line with the Fed”.
“With no compelling positives or negatives expected for the Mexican economy in the near-term, we think that the peso will track general EM FX sentiment”.
“On the whole Banxico has been reasonably relaxed about MXN weakness even as it has slumped to new lows against USD”.
“On 2 July, in an interview, Governor Carstens said that the weakness in MXN has been “exaggerated” by global volatility, but the currency should bounce back due to the outlook for the Mexican economy”.
“We think that he may eventually be proved right if growth in Mexico picks up next year, as we expect. But in the near-term we see USDMXN being driven more my global rather than domestic developments”.
(Market News Provided by FXstreet)