MEXICO GDP KEY POINTS:
- Mexico’s second-quarter GDP will grow 1.5% qoq and 19.7% y / y, slightly below market expectations
- Economic expansion was driven by the labor-intensive tertiary services sector
- Progress in the recovery may allow Banxico to raise interest rates again in the coming months, but tightening plans will depend on the evolution of the pandemic.
The Mexican economy extended a dynamic from April to June, if the country continuesed recover crisis caused by the coronavirus pandemic. According to the National Institute of Statistics, Geography and Informatics (INEGI), gross domestic product grew by 1 in the second quarter.5% seasonally adjusted (qoq) and by 19.7% compared to the previous year (a / a) supported by labor-intensive tertiary / service sectors. Economists waited a 1.8quarter – on – quarter and9.8% compared to a year ago printida. Although the annual figure is in line with the strong setback In the case of domestic demand, it is important to note that the base effect responsible for it durable increase.
Source: DailyFX economic calendar
Although the data fell slightly below expectations, the economy is undoubtedly continuing to improve. This may allow Banxicol to continue raising borrowing costs in the second half of the year to contain growing inflationary pressures. Traders are waiting now about 100 basis points of tightening for the rest of 2021, at a rate of ~ 20 bps rate raise the price For the meeting on 12 August. However, austerity plans could quickly come to an end if the new wave of COVID-19 undermines confidence and weakens recovery. This means that if the health crisis worsens during an increase in coronavirus cases, Banxico may stay on hold for the next few months until the pandemic increases with vaccination rates. For this reason, traders should closely monitor what is happening on the pandemic front in the coming weeks and whether new outbreaks will lead to restrictions on movement.
Back to today’s data, the results did not bring significant steps USD / MXN exchange rate. In fact, at the time of writing, the couple is trading around 19.85 near the flat line. However, the price may rise higher after the NY opening clock if risk aversion increases due to the weakness of US equity. At the time of writing, future contracts were signed Nasdaq The index points to a sharp decline, driven by a significant decline in Amazon stocks an hour after that disappointing quarterly earnings results.
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– Written by DailyFX market strategist Diego Colman