MXN/USD Outlook: Slightly positive, but likely to move sideways, as the rate is above its recent average but lacks a clear driver bringing sustained upward momentum.
Key drivers:
• Rate gap: Mexico's central bank maintains a higher interest rate compared to the US Federal Reserve, creating an attractive option for investors in peso-denominated assets.
• Risk/commodities: Higher oil prices continue to support the Mexican Peso, benefiting the economy and bolstering confidence amid rising fiscal accounts.
• Macro factor: Ongoing uncertainties regarding the US-Mexico-Canada Agreement (USMCA) introduce caution for businesses, affecting general market dynamics.
Range: The MXN/USD is likely to hold within its recent range as it adapts to both market pressures and geopolitical developments.
What could change it:
• Upside risk: Any significant improvement in US economic data could bolster the USD and pressure the MXN.
• Downside risk: Further escalation in geopolitical tensions or a worsening economic outlook in the US could lead to additional pressure on the USD.
