USD/MXN Outlook:
The USD/MXN rate is currently below its recent average and near recent lows. The outlook is likely to decrease, driven by underlying economic pressures.
Key drivers:
• Rate gap: The Federal Reserve has maintained a stronger monetary stance compared to Banxico, which recently held interest rates steady, causing pressure on the peso.
• Risk/commodities: As oil prices trend lower, this may negatively impact the peso, which is sensitive to fluctuations in commodity prices due to Mexico's oil dependency.
• One macro factor: The forecasted contraction in US durable goods orders could weaken the USD further, affecting the exchange rate.
Range:
The USD/MXN exchange rate is expected to drift within its recent range, which has shown stability amid current pressures.
What could change it:
• Upside risk: A stronger-than-expected US economic indicator could rally the USD against the MXN.
• Downside risk: Any positive developments in inflation or trade relations for Mexico may strengthen the peso, adding further downward pressure on the USD/MXN rate.