MXN has been Credit Suisse’s favourite EM currency throughout H123. The bank remains constructive on the Peso.

Banxico is expected to cut ahead of the Fed 

Soft CPI data surprises have driven markets to expect Banxico to cut rates ahead of the Fed, starting in Q4. This would be at odds with the previous history of Banxico waiting for the Fed to cut rates before initiating its own easing cycle. 

Given the bank’s focus on FX stability under the Rodriguez leadership, we are skeptical these expectations will realize and remain therefore constructive on the Peso. 

A US activity slowdown would pose a bigger threat to MXN's strength.