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6 Feb 2015
Oil prices could drag USD/MXN lower – Rabobank
FXStreet (Edinburgh) - An extension of the current recovery in the crude oil prices could lend some extra support to the Mexican peso, weighing on USD/MXN, remarked Jane Foley, Senior Currency Strategist at Rabobank.
Key Quotes
“MXN has been on the back foot since the fall in oil prices gathered pace and subsequent phases of broad based EM FX selling have led to MXN underperformance on the back of its role as the only fully convertible and deliverable LatAm currency”.
“USD/MXN is set to remain at the mercy of oil with a leg lower in prices likely to trigger a move north of the 15 handle”.
“Conversely, a recovery in oil prices should help USD/MXN move back down toward the 14.50 region”.
“In terms of monetary policy, we no longer forecast a pre-Fed 50bp hike from Banxico but longer term the underlying backdrop in Mexico remains supportive of MXN appreciation with manufacturing the main driver of growth”.
Key Quotes
“MXN has been on the back foot since the fall in oil prices gathered pace and subsequent phases of broad based EM FX selling have led to MXN underperformance on the back of its role as the only fully convertible and deliverable LatAm currency”.
“USD/MXN is set to remain at the mercy of oil with a leg lower in prices likely to trigger a move north of the 15 handle”.
“Conversely, a recovery in oil prices should help USD/MXN move back down toward the 14.50 region”.
“In terms of monetary policy, we no longer forecast a pre-Fed 50bp hike from Banxico but longer term the underlying backdrop in Mexico remains supportive of MXN appreciation with manufacturing the main driver of growth”.