Banxico is forecast to keep rates on hold today shortly after the release of inflation data for October. Headline CPI likely slowed further to 4.25% YoY in October. 

We expect the central bank to extend the pause and reiterate that rates need to stay at current levels for a prolonged period to achieve a sustained and orderly convergence of headline inflation on the 3% target.

We are tactically short USD/MXN, targeting 16.50 in 6-9 months based on our house view for Fed cuts in 2024 and domestic disinflation.