Bank of Mexico's deputy governor Jonathan Heath is on the wires saying:
- sees a terminal interest rate reaching between 11.25% and 11.75%, but says a lot can change
- rate hiking cycle is nearing its terminal rate
- monetary posture clearly restrictive
- once terminal rate is reached, we will leave rates at that level for a good amount of time to allow monetary policy to take effect
- forward guidance in the last policy statement of the smaller rate hike in March is not a commitment. Ultimate decision is data dependent
- sees inflationary pressures starting to move to more local, domestic factors from global pressures
- stickiness of inflation in scenario of preponderance of domestic pressures merits a coherent monetary posture
Recall that the Bank of Mexico surprised the markets with a 50 basis point hike last week that took the rate to 11%.
Looking at the hourly chart, the price of the USDMXN moved to a new low going back to 2018, but could not maintain downside momentum. The corrective move took the price back above its 100 hour moving average yesterday and above a swing area between 18.7069 and 18.7313, but failed and rotated back to the downside. Today, the price once again moved back above the 100 hour moving average only to fail once again. At 100 hour moving average currently comes in at 18.5970.
On the downside move below 18.47809 low from yesterday would increase the bearish bias. On the top side move above the 100 hour moving average – and stay above – as needed to get the pair off its low (high MXN). Until then, the sellers remain in control.