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Mexican Peso: USMCA risks and Banxico stance – Societe Generale

FXStreetJul 1, 2026 11:48 AM
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Societe Generale analysts Dev Ashish and Brendan McKenna discuss how ongoing United States-Mexico-Canada Agreement (USMCA) review uncertainty is likely to prolong policy risk for Mexico and weigh on growth and capex. They note that Banxico’s inclination to ease and new bond-buying authority intersect with their existing short EUR/MXN trade recommendation and 2-year rate receiver position, which they currently keep unchanged.

Steady with USMCA uncertainty

"The July 1 review will go ahead but will likely only serve as a starting point, with no immediate decision; the most probable outcome is a move toward annual reviews, prolonging policy uncertainty."

"Mexico’s exports remain strong, supported by US demand and supply-chain shifts, but investment and capacity expansion are lagging, leaving utilization tight and raising inflation risks."

"Ongoing USMCA uncertainty will continue to weigh on growth and capex, keeping Banxico inclined to ease; however, a hawkish Fed could drive FX volatility and limit policy flexibility."

"USMCA-related uncertainty is perhaps the underlying force for Banxico being extended new bond buying authority."

"We do not view Banxico’s enhanced ability to purchase bonds as disruptive to our existing short EUR/MXN trade recommendation or 2-year rate receiver position, but will keep an eye on whether bond purchases evolve going forward."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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