AUD/MXN Outlook:
The Australian dollar (AUD) is trading above its recent average, showing strength near recent highs. However, ongoing geopolitical tensions are currently weighing on the currency.
Key drivers:
• Rate gap: The Reserve Bank of Australia faces pressure while the Bank of Mexico maintains steady rates, which supports the Mexican Peso (MXN).
• Risk/commodities: Oil prices have surged, negatively impacting AUD as Australia is a net energy importer, raising costs and inflation risks.
• One macro factor: A potential GDP growth acceleration in Australia may help the AUD if confirmed by upcoming data.
Range:
The AUD/MXN is likely to hold within its recent range, showing stability between approximately 11.78 and 12.47.
What could change it:
• Upside risk: A significant rebound in global risk appetite could strengthen the AUD as tensions ease.
• Downside risk: Continued geopolitical uncertainty could lead to further AUD weakness against the MXN.