Strategists at Credit Suisse switch to targeting a USD/MXN 19.55-20.00 range, vs the previous 20.00 target. The main reason is that they see Banxico policy uncertainty partially offsetting positive macro factors.
Balance of payments data continue to show a very supportive picture for the peso
“The balance of payments continues to show supportive demand spillover from US stimulus via the remittances and goods trade channels, while foreign direct investment remains supported and legal challenges via the USMCA resolution mechanism channel have so far been benign. Also, it’s worth noting that the threat of a rating downgrade has decreased with both Fitch and Moody’s affirming ratings of BBB- and Baa1 on 15 Apr and on 17 Apr respectively.”
“The political outlook remains noisy, but barring large surprises is likely to remain of limited impact on FX, with a marginal asymmetry in favour of an FX-supportive outcome.”
“The main issue that currently leaves us less enthusiastic about MXN than before is that we do not see near-term potential for a clear resolution to uncertainty around the Banxico policy outlook, and we suspect that as long as this persists, markets will be more inclined to focus on currencies with higher propensity to hawkish policy shifts.”
“We remain fundamentally constructive on MXN, with the pair having breached our previous 20.00 target, but opt for the time being to shift from a point target approach to a range based one between 20.00 and the January 2021 lows around 19.55, with a bias towards a stronger peso.”
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.