USD/MXN gaps higher once as New York walks in. The pair continues to trade quite choppy each day, as holding onto gamma longs/risk reversals has remained king (albeit they're at very lofty levels). There's a bit more pain to chew through with a decent amount of stops from 19.00-19.50, but the pair is starting to get into the zone where real money opinions become a bit more bifurcated: some think a break through 19.00 is where things start getting a bit overdone and there would be interest to fade as the carry side of the story still remains attractive others have begun feeling some pain and unwinding some legacy exposure
At this point:
*CTAs/models have now flipped to net long USDs
*Macros are generally squared up on MXN longs
*Real money accounts are being tested and there's a split on initiating unwinds/fading the move
The UBS strategy team feels MXN will calm down once the election politics settles down, which is likely coming shortly as President AMLO and President-elect Claudia Sheinbaum sit down to start making cabinet appointments. I can envision a period of consolidation in a couple weeks, but the noise is likely to ratchet up again heading into the first pressidential debate.
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