USD/MXN holds steady around 18.80

• Another quiet session for USD/MXN, remains in a consolidation range. 
• US dollar drops versus majors, mixed versus commodity and emerging market currencies. 

The USD/MXN is rising modestly on Wednesday, hovering around 18.80. For the sixth time in a row, the pair is about to post a daily close between 18.80 and 18.82, as it continues to move sideways, still within a dominant bearish trend. 

The greenback posted mixed results across the board amid a modest slide in US yields. Wall Street hit record highs while crude oil fell marginally. China and the US signed the phase one trade agreement.

The improvement in risk appetite in Wall Street did not help Latin American currencies that were the worst performers. The Mexican peso outperformed within LA but still dropped versus the dollar. 

MXN medium term view

“We wax lyrical constantly about MXN being the most attractive carry currency in the world when adjusting for volatility and liquidity. And despite Banxico rate cuts, this remains the case”, explained Rabobank analysts. According to them, “liquidity trumps fundamentals,” so they consider USD/MXN will remain under 19, but they warn that if volatility spikes, it could move sharply higher. 

“With the current glass half full view of the market still ruling the roost, for now, we expect USD/MXN to trade around the 19 handle in the coming month”, Rabobank analysts concluded.