Daily digest market movers Mexican Peso to remain volatile – Banxico

Banxico’s board members noted that the Mexican Peso traded broadly, depreciating markedly and exhibiting volatility mainly due to uncertainty about the US election.

They added that inflation risks are tilted to the upside, mentioning a greater exchange rate depreciation. They acknowledged the outlook for inflation still calls for a restrictive policy stance.

In the bank's quarterly report, Banxico’s Governor Victoria Rodriguez commented that they monitored the recent peso volatility and added that there has not been a need to intervene in the forex market.

The quarterly report revealed that Banxico updated the Mexican economy to grow 1.8% in 2024, up from 1.5%. Nevertheless, the central bank kept its 2025 Gross Domestic Product (GDP) projection at 1.2%.

The CME FedWatch Tool suggests that investors see a 66% chance of a 25-basis-points (bps) rate cut at the US central bank’s December meeting, up from 59% a day ago.

Data from the Chicago Board of Trade, via the December Fed funds rate futures contract, shows investors estimate 24 bps of Fed easing by the end of 2024.