Currency Forecast - MXN: Biggest Gains Likely Past For 2017 - SEPT 2017

BMI View: We remain constructive on the Mexican peso in light of high real yields and a relatively undervalued real effective exchange rate. However, following a substantial rally in the year-to-date, we see limited scope for appreciation in H217.

Short-Term Outlook (Three-to-six Months)

We have a neutral outlook on the Mexican peso (MXN) in the short term, following a substantial rally in recent months. The unit is likely to be supported by high real yields. The technical picture also remains relatively favourable, although momentum indicators on the weekly chart are looking overstretched. The unit's break through trendline resistance around MXN19.00/USD in late March ended the depreciatory trend in place since 2015.

Big Break, But Further Gains Will Be Hard To Come By
Mexico - Exchange Rate, USD/MXN (Monthly)
Source: Bloomberg, BMI

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