MXN/USD Outlook:
Slightly positive, but likely to move sideways as the rate is above its recent average yet lacks a clear driver for a strong trend.
Key drivers:
- Rate gap: The Bank of Mexico's recent interest rate cuts make the peso less attractive compared to the U.S. dollar, which maintains higher rates.
- Risk/commodities: Oil prices remain volatile; this trend may influence the peso as Mexico's economy is closely tied to oil revenues.
- One macro factor: Geopolitical tensions surrounding U.S. trade policies are leading to lower investor confidence in the dollar, affecting its strength.
Range:
The MXN/USD is likely to drift within its recent range as mixed signals from both economies temper significant movement.
What could change it:
- Upside risk: A substantial improvement in U.S. labor data could boost the dollar's strength and impact the exchange rate.
- Downside risk: A decline in oil prices or further geopolitical tensions may weaken the peso, leading to a potential drop in its value against the dollar.
