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- USD/MXN can trade below the 17 level – ING
USD/MXN can trade below the 17 level – ING
The Latam currencies continue to perform well in a low-volatility world looking for carry trade opportunities. The Mexican Peso remains the standout performer and should hold onto its gains, economists at ING report.
Peso remains the market’s best friend
The continued fall in cross-market volatility is favouring the carry trade, where the Mexican Peso continues to offer high risk-adjusted returns. This is becoming a crowded trade – meaning that any corrections could be violent – but the core story remains a strong one for the MXN.
Banxico’s policy has certainly helped the peso. A small risk is MXN coming under pressure should Banxico fail to match a summer hike from the Fed – but that seems manageable.
If we’re right with our weaker Dollar call, USD/MXN can trade sub- 17.
USD/MXN – 1M 17.50 3M 17.25 6M 17.00 12M 16.50
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