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Analysts from Rabobank see the USD/MXN pair moving towards 24.50 by the end of July. They point out that seasonality shows a mixed bag for July but they note USD/MXN has rallied during August in eleven of the past thirteen years.

Key Quotes: 

“MXN was the worst performing currency in June, falling around 4.2% against USD with USD/MXN touching a high of 23.23. Regular readers will know that the EM FX risk rally caught us somewhat off guard. We didn’t expect LatAm FX in particular to join the risk rally viewed across other asset classes.”

“We still see USD/MXN moving towards that level (24.5) by the end of July. A look at seasonality shows a mixed bag for July but it is worth highlighting that USD/MXN has rallied during August in eleven of the past thirteen years.”

“Outside of seasonality, we expect the “risk-on, risk-off” (RoRo) dynamic to be the main driver of USD/MXN and FX markets in general. That said, it is worth noting that this relationship has shifted over the past few weeks.”

“The key to risk sentiment in the weeks ahead will be the US Covid19 numbers and domestic Mexican drivers will be less important for USD/MXN.”