Rabo’s “One-month MXN market model” points to a move down to 16.95; slightly less aggressive than our base case target of 16.8 by the end of May Volatility has started to come down, and MXN longs are picking up. We expect this theme to continue over the coming weeks, assuming no further escalations emerge in the near term, which is our base case, albeit one on very shaky ground. Further spikes in volatility will be inevitable. But while vol subsides, MXN will rally. As such, we expect USD/MXN to trade back down towards the 16.80 level over the course of May.- Rabobank Strategy
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