- Bancocko Board sees an increase in economic recession and pressure on the negative side, which enhances expectations for more price cuts.
- The majority noticed the MXN trading organized and improved liquidity conditions despite external fluctuations.
- UsD/MXN can be tested 20.00 if support is in 20.30 rest periods; The upward risks resume only over 20.50.
On Thursday, April 10, Banco De Mexico (banxico) released the latest minutes at the meeting, which all members of the Board of Directors stated that the Mexican economy slows down amid the advanced inflation process, which paves the way for further mitigation.
Pancico meeting key quotes:
The council estimates that in the future, it can continue to calibrate the position of monetary policy and consider the amendment of similar sizes.
Most members of the Board of Directors said that the economy is expected to show an increase in recession.
Most members of the Board of Directors said that MXN trading conditions remained organization and even showed improvements during this period.
The majority mentioned the balance of risk on economic activity, biased to the negative aspect.
Most of them indicated that the risks on the negative aspect of inflation have gained importance.
The majority of the Board of Directors said that the expected weakness of economic activity and the conditions of the largest recession will contribute to the continuation of the inflation.
A member of the Board of Directors said that a flash estimate for the month of February indicates that the contraction will extend to that month.
A scenario of high and permanent tariffs is unlikely to achieve all American imports from Mexico.
USD/MXN price expectations: Technical expectations
Although USD/MXN remains biased up, a decrease under 20.30 can pave the way for more losses. The next main support level lies in 20.00, followed by a simple moving average for 200 days (SMA) in 19.83. If it is exceeded, the next station will be 19.50. On the contrary, the continuation of the rise is looming if buyers pay the pair after an area of 20.50, with the next number 21.00.
Pancico is common questions
Mexico Bank, also known as Pancico, is the central bank in the country. Its mission is to maintain the value of Mexico, Mexican Peso (MXN), and control of monetary policy. To this end, its main goal is to maintain low and stable inflation within the target levels – at or close to its 3 % goal, the center point in the tolerance range ranges between 2 % and 4 %.
The main tool for banknotes for monetary policy guidance is to determine interest rates. When inflation is higher than the target, the bank will try to tame it by raising prices, which makes it more expensive for families and companies to borrow money and thus cool the economy. The highest interest rates are generally positive for Mexican Peso (MXN) because it leads to higher returns, making the country a more attractive place for investors. On the contrary, low interest rates tend to weaken MXN. The difference in the average with the US dollar, or how Banxico is expected to determine interest rates compared to the Federal Federal Reserve (Fed), which is a major factor.
Pancico meets eight times a year, and its monetary policy is greatly affected by the US Federal Reserve decisions (Fed). Therefore, the Central Bank Resolution Committee usually gathered a week after the Federal Reserve. When doing this, Pancico interacts and sometimes expects monetary policy measures set by the Federal Reserve. For example, after the Covid-19 pandemic, before raising the federal reserve rate, Pancico was first trying to reduce the chances of a significant decrease in the Mexican Bzo (MXN) and to prevent capital flows that could shake the country.
