AUD/MXN Outlook: Slightly positive, but likely to move sideways as the Australian dollar is trading above its recent average but without a clear driving factor.
Key drivers:
- Rate gap: The Reserve Bank of Australia's potential rate hike is under consideration, while Mexico's central bank holds its rate at 7%, creating a yield differential that supports the peso.
- Risk/commodities: Rising commodity prices have provided some support for the Australian dollar, yet inconsistent trends in iron ore prices may limit its strength.
- One macro factor: Ongoing uncertainty over the US-Mexico-Canada Agreement (USMCA) could introduce volatility in trade relationships, influencing the peso's outlook.
Range: AUD/MXN is likely to hold within its recent range, with stable movement around current levels.
What could change it:
- Upside risk: A surprise interest rate hike from the Reserve Bank of Australia could boost the AUD.
- Downside risk: Significant declines in commodity prices or negative trade developments affecting the peso may weaken the AUD relative to the MXN.
