Mexico & the US-Canada trade war, Brazil’s slowdown

The recent US-Canada trade talks that fell apart abruptly offer hints that Mexico might be able to secure concessions on auto and steel. And the US’s demands for a say on Canada’s external trade policy – which were a bone of contention – may be less of a red line for Mexico. Elsewhere, GDP data from Brazil due out next Tuesday are likely to show that growth slowed sharply in Q2. Combined with the further fall in inflation in the first half of August, that lends support to our forecast for another 25bp cut at Copom's September meeting.