AUD/MXN Outlook:
The AUD/MXN exchange rate is slightly positive, likely to move sideways as it is trading above its recent average while lacking a clear driver to push it higher. It is currently near the top end of its recent range.
Key drivers:
• Rate gap: The Reserve Bank of Australia is considering future rate hikes, contrasting with the Bank of Mexico's stable interest rate, impacting the attractiveness of AUD over MXN.
• Risk/commodities: A rise in demand for Australian exports, fueled by China's economic recovery, enhances the outlook for the AUD.
• One macro factor: Improved consumer confidence in Australia signals economic strength, potentially limiting the downside for the AUD.
Range:
Expect the AUD/MXN to hold within its recent range, with potential to drift towards upper levels without strong momentum.
What could change it:
• Upside risk: A surprising hike in Australian interest rates could significantly strengthen the AUD.
• Downside risk: Any deterioration in global risk appetite or local economic conditions could pressure the AUD lower.