USD/MXN Outlook:
Slightly weaker, but likely to move sideways. The exchange rate is currently below its recent average and near the lower end of its 3-month range, influenced by recent data on US jobless claims and global risk factors.
Key drivers:
• Rate gap: The US Federal Reserve maintains a higher interest rate compared to Mexico's central bank, encouraging demand for the dollar.
• Risk/commodities: Oil prices are experiencing volatility, which tends to impact the Mexican Peso more than the US Dollar.
• One macro factor: Reports of an expected rise in US jobless claims may dampen demand for the dollar, providing support for the peso.
Range:
Movement is likely to drift within the recent range, between 17.12 and 18.26.
What could change it:
• Upside risk: A significant escalation in geopolitical tensions could push investors back to the safety of the US Dollar.
• Downside risk: If economic recovery data from the US shows improvement, it may lift the dollar and reduce demand for the peso.