MEXICO: USDMXN Close to Unchanged on Week, Banxico Decision Next Thursday

Dec-13 12:05
  • Peso volatility has been relatively muted this week, with USDMXN broadly respecting a 20.10/30 range and spot currently trading at close to unchanged levels from last Friday’s close.
  • Markets return from a public holiday on Thursday, and Mexico’s central bank is due to release its quarterly report on regional economies during a press conference. Additionally, Mexico’s lower house and Senate hold final sessions of the legislative period.
  • The central bank economist survey and retail sales data for October are both due early next week, ahead of Banxico’s rate decision on Thursday.
  • Following the dovish tilt to Banxico’s unanimous cut in November, subsequent central bank rhetoric has evolved in a similar direction. While most analysts expect another 25bp move to 10.00% next week, there are calls for the committee to step up the pace of easing.
  • Indeed, Governor Rodriguez has not ruled out larger cuts ahead, appearing content with latest developments in the currency market and the markets interpretation of the latest budget proposal for 2025.

Historical bullets

GERMANY: CDU Leader Doesn't Shut Down Debt Brake Reform Talk

Nov-13 12:03

In a potentially significant signal Freidrich Merz, leader of the conservative Christian Democratic Union (CDU) and favourite to be the next chancellor, said at the SZ Economic Summit earlier today that he is not wholly averse to the prospect of reform to the debt brake. As SZ notes, "contrary to what many statements from the ranks of the [CDU] have suggested so far, the debt brake anchored in the constitution is by no means sacrosanct for the possible next Chancellor. "

  • Merz: "Only the first 20 articles of the Basic Law are unchangeable - everything else can of course be discussed [...] Is the result that we spend even more money on consumption and social policy? Then the answer is no, If it is important for investment[...] then the answer may be different."
  • Movement on the debt brake could smooth coalition talks with Chancellor Olaf Scholz's centre-left Social Democrats (SPD). However, changing the debt brake means changing the constitution. This requires a two-thirds majority in the Bundestag. There is no guarantee that this threshold would be crossed by a Union-SPD gov't.
  • The pro-business liberal Free Democrats (FDP) are opposed to its relaxation and if they cross the 5% threshold to enter the Bundestag will inevitably oppose reform. The Greens support debt brake reform but are likely to lose seats meaning even with their backing there may not be the required numbers.
  • Any reform could come down to the far-left Sahra Wagenknecht Alliance and the far-right Alternative for Germany. This poses problems as the gov't relying on their backing would break the 'firewall' around both parties that has seen gov'ts refuse to work with them in the past. 

US MBA: REFIS -2% SA; PURCH INDEX +2% SA THRU NOV 8 WK

Nov-13 12:02
  • US MBA: REFIS -2% SA; PURCH INDEX +2% SA THRU NOV 8 WK
  • US MBA: UNADJ PURCHASE INDEX +1% VS YEAR-EARLIER LEVEL 
  • US MBA: 30-YR CONFORMING MORTGAGE RATE 6.86% VS 6.81% PREV

**MNI: US MBA: MARKET COMPOSITE +0.5% SA THRU NOV 08 WK

Nov-13 12:02
  • MNI: US MBA: MARKET COMPOSITE +0.5% SA THRU NOV 08 WK