USD/MXN: Bullish stance on the peso, but alert to possible new plot twists – Credit Suisse

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Credit Suisse economists reaffirm their Bullish stance on the Mexican pesobut they also point out that Strong CPI surprise is likely to lead to further two-way uncertainty around Banxico’s policy and therefore deserves attention.

The surprise of the CPI data creates new risk appetites on Banxico’s growth and policy.

“We continue to be constructive regarding the MXN, we maintain our target of 18.50 in the USD/MXN for the first quarter and we continue to favor rallies to the top of our range around 20.00″.

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The strong CPI surprise, however, creates two-way risks around Banxico’s monetary policy expectations, especially with the increased uncertainty around near-term growth prospects and a new Banxico board member in his place. These risks are well considered in terms of risk premium, and they do not change our stance on the MXN, but nonetheless need to be watched closely in the coming weeks.”

Source: Fx Street

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