Bias: bearish-to-range-bound, since the AUD is below the 90-day average and in the lower half of its 3-month range.
Key drivers:
• Rate gap: The Reserve Bank of Australia's potential interest rate hikes may not have the same impact on the Mexican Peso, as Banxico has kept rates steady, leading to a less favorable rate differential for the AUD.
• Risk/commodities: Recent softening of Chinese inflation raises concerns over demand for Australian exports, particularly commodities like iron ore, which could weigh on the AUD.
• One macro factor: Mexico's GDP growth forecast of just 1.3% signals that economic growth might be slower than anticipated, putting pressure on the peso and supporting a more stable AUD/MXN.
Range: The AUD/MXN is likely to drift within its recent range as both currencies face external pressures but remain stable.
What could change it:
• Upside risk: A rise in commodity prices could boost demand for the AUD and strengthen it against the MXN.
• Downside risk: Further disappointing economic data from Australia could exacerbate the current weakness of the AUD against the MXN.
