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Banorte Expecting 16.65-17.00 Range To Hold This Week

MXN
  • Banorte have noted that locally, investors incorporated the hawkish tone of Banxico’s minutes, which was favourable for the Mexican peso as expectations of interest rate cuts this year moderated.
  • Thus, the peso breached relevant short-term technical resistance and USDMXN consolidated back below the 17.00 mark last week. The local currency closed last Friday at 16.75 and 3-month implied volatility at 11.4% (vs. 12.3% the previous week).
  • This week, US employment data and speeches from Fed members could influence the performance of the dollar and broader FX markets.
  • For the MXN, Banorte anticipate a defensive performance supported by an attractive volatility-adjusted carry, as well as solid fundamentals and the prospect of growing flows from exports, tourism, remittances and investment. Banorte estimate a trading range between USD/MXN 16.65 and 17.00.

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