30 Jan 2015
BRL and MXN in opposite paths – TDS
FXStreet (Edinburgh) - Strategists at TD Securities assessed the different prospects for the Brazilian Real and the Mexican Peso.
Key Quotes
“Despite high inflation, Banxico is likely to remain on hold until the Fed begins hiking in the second half”.
“In Brazil, fiscal policy will be supportive of the BCB’s goals, and we expect the Copom will leave rates elevated for a prolonged period of time, rather than looking to cut in the face of weak growth or the first inflation print that suggests an inflection point and the first signs that inflation is on a declining path”.
“With the gradual unwinding of the BCB swaps program and poor growth prospects, we expect BRL to depreciate over the course of the year”.
“In Mexico, we expect MXN to benefit from strong seasonality and US growth prospects in the first half of the year, and to depreciate in the second half as US monetary policy begins to normalize”.
Key Quotes
“Despite high inflation, Banxico is likely to remain on hold until the Fed begins hiking in the second half”.
“In Brazil, fiscal policy will be supportive of the BCB’s goals, and we expect the Copom will leave rates elevated for a prolonged period of time, rather than looking to cut in the face of weak growth or the first inflation print that suggests an inflection point and the first signs that inflation is on a declining path”.
“With the gradual unwinding of the BCB swaps program and poor growth prospects, we expect BRL to depreciate over the course of the year”.
“In Mexico, we expect MXN to benefit from strong seasonality and US growth prospects in the first half of the year, and to depreciate in the second half as US monetary policy begins to normalize”.