The Mexican Peso has been rising versus the US Dollar over the last weeks. Analysts at MUFG Bank, argue the resilience of the Mexican Peso might not last long amid domestic and external risks. Their forecast is for USD/MXN to reach 19.80 by the end of the first quarter 2023 and 20.00 by the third quarter.
Key Quotes:
“The Mexican peso continued its strengthening path in November helped by improving risk sentiment and a weaker US dollar supported by expectations for a slower pace of Fed hikes.”
“Further Fed hikes albeit slower along with the resilient core inflation in Mexico leads to the expectation of further interest rate hikes in Mexico. We expect a further 50bps hike in December meeting to 10.50%, followed by a final rate hike to 11.00% early next year. Although such scenario might be favourable for MXN appreciation, we see a set of risk factors that might revert the MXN appreciation observed in the latest months.”
“The scenario of some recession in the United States affects Mexican growth path.”
“We keep our bearish forecast profile for MXN due to building fears of a sharp global economic slowdown, and domestic risks coming from potential radical AMLO policies leading to some increased fiscal imbalances. Such risks are higher in a circumstance of weaker economic growth ahead that could impact Lopez Obrador’s popularity that is currently at quite high levels (61% approval rating).”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD continues to juggle below 0.6660 ahead of Australian Retail Sales and CPI data
The AUD/USD pair is demonstrating a back-and-forth action below 0.6660 from Friday’s session. The sideways performance in the Aussie asset is expected to conclude and a power-pack action will be witnessed.
EUR/USD bulls attack 1.0800 amid risk-on mood, focus on ECB’s Lagarde, US Consumer Confidence
EUR/USD extends the week-start recovery to 1.0800 during early Asian session on Tuesday, picking up bids to refresh the intraday high of late, as the risk-on mood joins the hawkish comments from the European Central Bank (ECB) officials.
Gold: XAU/USD finds support above $1,940; drops more than 1% on Monday Premium
Spot gold dropped on Monday, losing more than $20 as US yields rose, with the 10-year surpassing 3.50%. The yellow metal bottomed at $1,940/oz and then trimmed losses, climbing back above $1,950.
This is how EOS holders responded to the network's EVM testnet launch, what to expect this week
The first milestone on the EOS Network Foundation’s roadmap, the completion of the EOS EVM (Ethereum Virtual Machine) code, was achieved on March 22, starting the countdown to the launch of the EOS testnet.
US Consumer Confidence Preview: No good news for Americans Premium
The United States will publish the March Conference Board Consumer Confidence index, and market players anticipate it has contracted to 101 from 102.9 in February.