Last week, the central bank of Mexico its bank rate by 25bps in order to protect the MXN. The country is suffering from a lower inflationary pressure as it reached to a historical low, therefore, the Banxico is expected to hike bank rates twice in near future. However, analysts believe that the bank is unlikely to follow Fed's rate hike.
"We still believe the TIIE curve is pricing in too much, and we like receiving TIIE while paying Fed funds for 2016. Price action for the peso into year-end will likely be driven by oil prices and overall sentiment towards emerging markets", says Barclays in a research note.
Retail sales, economic activity index, and unemployment rate data are scheduled to release this week will update the economic outlook of the country.
