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.
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FXStreet Insights Team
FXStreet
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