Mexican Inflation data on tap

Mexican mid-month inflation data for April, out on Wednesday at 12:00 GMT, could adjust expectations for the Banxico’s policy approach going forward, given its insistence on data-dependency, as revealed in the last meeting’s minutes. 

Mexican 1st half-month inflation in March is expected to steady at 4.48% on a year-over-year basis. On month, prices are expected to decline by 0.03% after rising 0.27% in the previous reading. 

1st half-month core inflation is forecast to decline to 4.39% YoY in March from 4.69% previously. On a monthly basis, inflation is set to fall to 0.16% from 0.33%.  

A higher-than-previous result is likely to further lower the probability of the central bank following up the March rate cut with another cut in the near term, and vice versa for a lower-than-previous result. 

Higher interest rates generally appreciate a currency by attracting more inflows of foreign capital and the opposite for lower interest rates