Data to confirm moderate level of economic activity in Mexico

Data this week should confirm a firm but moderate level of economic activity in Mexico, after an increase in the unemployment rate and a decline in retail sales were reported last week. The main data release is gross fixed investment on Thursday. 

An increase of 1.5% m/m sa is expected in total investment as a result of the 0.5% m/m sa growth in construction activities combined with a 3.8% m/m sa expansion in capital imports observed in that month. It is believed that the backdrop of moderate economic activity, coupled with low inflation and limited FX pass-through, will convince Banxico to keep its policy rate unchanged in its meeting in mid-December. 

"The market is pricing a full hike, contrary to our expectations, and we recommend receiving 3m TIIE", says Barclays.