USD/MXN: Unlikely to hold below 16.50 levels – ING
|Economists at ING are fearful the Mexican Peso (MXN) is starting to become a little too strong.
Peso to hold gains despite start of Banxico easing
Banxico has just started its easing cycle with a 25 bps rate cut to 11.00%. It has not provided much forward guidance – probably because it requires flexibility around Fed policy too. Banxico has not said much about the very strong, inflation-adjusted Peso. However, it is up 16% YoY and at the highest levels since 2008 and could start to become a problem.
The above is our preference in that the rates market will probably take the strain (i.e. steady cuts from Banxico this year) and USD/MXN continues in a 16.50/17.00 range rather than dropping below 16.00 when the Fed cuts.
Donald Trump remains the wild card – most recently threatening 100% tariffs on Chinese cars made in Mexico.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.