The Mexican peso was on a rollercoaster ride this week but, as we'd expected, Banxico placed more emphasis on the weakness in the economy as it pressed ahead with a 25bp cut (to 10.75%). And the accompanying statement left the door open to further cuts, which supports our view that the policy rate will be lowered to 10.00% this year. Elsewhere in the region, the key channel through which the resurfacing of US recession fears has had an impact is via commodity prices, especially the fall in industrial metals. We think that this has further to run, but that's mainly due to the structural slowdown in China's property sector, rather than weakness in the US economy.
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