Mexico Central Bank delivers 25bps rate hike to near 10-year high

The Mexican Central Bank (Banxico) voted to raise the target for the overnight interbank interest by 25 basis points to 8.00%, its first move since June.  One member voted to a 50 basis point increase.  The peso which is 0.6% stronger against the dollar, had a limited reaction to the monetary policy decision.  The rate hike was widely expected as Mexican inflation declined modestly in October to 4.9%, but still well above the 3% target.  The central bank also highlighted that since the last monetary policy decision, the Mexican peso depreciated significantly, down roughly 6% from the October 4th meeting .

Overall emerging market currencies are rebounding against the US dollar on renewed optimism on Sino-US trade talks.  US Trade Representative Robert Lighthizer told some industry executives that the next round of tariffs on Chinese imports has been put on hold.

The USD/MXN daily chart is displaying a triangle pattern that is highlighting key resistance just above the 20.500 region.  If the peso continues to rally, we could see key support from the 19.6000 level, followed by the 19.3200 region.

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Ed Moya

Ed Moya

Contributing Author at OANDA
With more than 20 years’ trading experience, Ed Moya was a Senior Market Analyst with OANDA for the Americas from November 2018 to November 2023.

His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies.

Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Prior to OANDA he worked with, where he provided market analysis on economic data and corporate news.

Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business, cheddar news, and CoinDesk TV. His views are trusted by the world’s most respected global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Seeking Alpha, The New York Times and The Wall Street Journal.

Ed holds a BA in Economics from Rutgers University.