JamesThatcher
Well-known member
What does the data mean to the market?
Mexico's central bank votes on where to set the countries interest rate.
Traders watch interest rate changes closely as interest rates are the primary factor in currency valuation.
A higher than expected rate is positive/bullish for the MXN (Mexican Peso), while a lower than expected rate is negative/bearish for the MXN.
Historic deviations and their outcome
June 24 2021 A shock hike in the rate by 0.25 basis points saw three minutes of continuing price action, making for a lovely trade and lots of opportunity to bank loads of pips.
Check out the price action here:
MX Interest Rate Decision 2021-06-24 18:00:00.0
MX Interest Rate Decision 2021-06-24 18:00:00.0
calendarapi.galaxysoftwareinc.com
November 12 2020 We saw an increase of +18 basis point (bps) from the average forecast, which created a massive 546 pip move in the first minute following the data release, that's an average of 30 pips per basis point. Great move!
Check out the price action here:
MX Interest Rate Decision 2020-11-12 19:00:00.0
MX Interest Rate Decision 2020-11-12 19:00:00.0
calendarapi.galaxysoftwareinc.com
August 15 2019 We saw a cut of -25 basis points (bps) from the average forecast, resulting in a move of 831 pips which was a lovely move!
Check out the price action here:
MX Interest Rate Decision 2019-08-15 18:00:00.0
MX Interest Rate Decision 2019-08-15 18:00:00.0
calendarapi.galaxysoftwareinc.com
I will use forecasts of:
Interest Rate 5.0
Today's trade plan
Today we have an expected hike to the rates however it's not a unanimous prediction which always makes interest rate decisions a lot more exciting.
Seventeen economists predict a hike to 5.00% but five predict a hike further to 5.25%
I'm using an average forecast of 5.05%
Therefore if we see a hike to 5.00% I will not take a trade.
If we see a hike of 5.05% or greater I will take a buy and expect 600 to 1000 pips.
If we see no hike and the rate remains at 4.75% I will take a sell and expect 900 - 1000 pips
Today's liquidity conditions are likely to be sub-par due to the closure of US markets for Veterans Day, and bank holidays in other countries. Which you should be aware of.
Tradable pairs
USDMXN
Hope this helps but please do your own analysis!!
Good luck!!
James Thatcher
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
