MNI BRIEF: Musalem: Too Soon To Add Trump Plans To Dec Fed SEP

MNI BRIEF: Larger Deficits Could Mean Higher Fed Rates-Schmid

MNI BRIEF: Germany Needs To Reform Debt Brake-Experts' Council

MNI China Daily Summary: Wednesday, November 13

MNI: PBOC Net Injects CNY215.7 Bln via OMO Wednesday

MNI: PBOC Sets Yuan Parity Higher At 7.1991 Weds; +0.73% Y/Y

MNI: US OCT TREASURY BUDGET -$257.5B

MNI: US OCT CPI UNROUNDED M/M 0.244%, CORE 0.280%

MNI: US OCT SUPERCORE CPI (CORE SERVICES EX-HOUSING) 0.314%

AUSTRALIA: 2025 Election Outcome Looking More Uncertain According To Newspoll

MNI EXCLUSIVE: German Turmoil Dashes EU's Joint-Funding Hopes -Officials

FED: Powell's Time Looks Up, Replacement Could Be Less Willing To Cut Rates?

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

LATAM FX: Commerzbank Believe Risks for USD/MXN Remain Skewed to Upside

LATAM FX
EM BulletBulletGlobalEmerging Market NewsRegion
  • In addition to Mexico-specific reasons (constitutional risks and the weak real economy), the risks associated with the new Trump administration clearly support the view of risks being tilted to the upside for USDMXN, according to Commerzbank.
  • They see the peso as one of the main losers from this election, and believe the coming months are unlikely to bring many positive developments for the peso. If Trump follows through with his trade policies, Mexico is likely to be one of the biggest losers, even more than the euro area and other European countries because these are (logically) much more diversified in terms of their trade flows.
  • The situation in Brazil is somewhat different. Recently Commerz argued that the Brazilian economy is one of the few that can keep pace with the very strong US growth and Selic rate hikes have further improved the carry versus the peso.
  • Furthermore, the spillover from tariffs is likely to be smaller than in Mexico, as Brazil exports a much smaller share of its exports to the US. Fiscal risks remain the main factor holding back the BRL, although there are anecdotal signs that progress is being made here as well. As such, Commerz expect BRL to relatively outperform in coming weeks.
204 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
  • In addition to Mexico-specific reasons (constitutional risks and the weak real economy), the risks associated with the new Trump administration clearly support the view of risks being tilted to the upside for USDMXN, according to Commerzbank.
  • They see the peso as one of the main losers from this election, and believe the coming months are unlikely to bring many positive developments for the peso. If Trump follows through with his trade policies, Mexico is likely to be one of the biggest losers, even more than the euro area and other European countries because these are (logically) much more diversified in terms of their trade flows.
  • The situation in Brazil is somewhat different. Recently Commerz argued that the Brazilian economy is one of the few that can keep pace with the very strong US growth and Selic rate hikes have further improved the carry versus the peso.
  • Furthermore, the spillover from tariffs is likely to be smaller than in Mexico, as Brazil exports a much smaller share of its exports to the US. Fiscal risks remain the main factor holding back the BRL, although there are anecdotal signs that progress is being made here as well. As such, Commerz expect BRL to relatively outperform in coming weeks.