Last week's the Fondeo rate 25 bps as a pre-emptive hike by Banxico to protect the MXN seems like serving the purpose at least in short run. With inflation running at historical lows and no demand pressures on sight.

This rate hike resulting in USDMXN's spiking bull run on check where the last week and this week remained in the range of 17.0319 and 17.3159.

In terms of data, While CPI on the other hand is increased 0.26% 2w/2w in the first fortnight of December as a result of price increases in airfares and tourism services, partially compensated by lower prices in some durables such as televisions and tires.

Core inflation was 0.27% 2w/2w, while the non-core component was at 0.21% 2w/2 which was mainly due to lower energy prices (-0.29% 2w/2w). In annual terms, inflation declined to 2.0% y/y from 2.1% previously.

We forecast biweekly inflation to remain at 0.30% 2w/2w in the 2nd fortnight of December, which should claim annual inflation at 2.1% y/y for the month as a whole.

In January, we expect downward pressures on prices to continue (from lower gasoline prices), while base effects should put inflation at 2.6% y/y in that month, remain below 3% for several months and close at 3.0% in a year from now.

Retail Sales in Mexico increased 0.30% in October of 2015 over the previous month.

Finally, the unemployment rate will be released shortly, (forecasts at 4.68%).