28 Apr 2015
Mexican peso could pick up pace in the near term – JP Morgan
FXStreet (Edinburgh) - The Mexican peso appears somewhat undervalued, according to analysts at JP Morgan, pointing to a recovery in the upcoming periods.
Key Quotes
“FX pass-through to inflation remains almost negligible, as has been the case in the last months, while activity disappointed consensus forecast, again”.
“Indeed, the low inflation prints together with soft economic activity momentum (our economic activity surprise indicator for Mexico remains in negative camp) have prompted a shift in the Banxico authorities, who have toned down their hawkish stance”.
“Therefore, and despite a more rangebound USD, the MXN has underperformed most Latin America peers month-to-date”.
“That said, in the short-term the MXN continues to look cheap to coincidental risk metrics, and soft US data suggests a likely correction from lows”.
“The relative cheapness the currency lingers, as our short-term valuation models continue to screen a cheap MXN in particular vis-à-vis the USD”.
Key Quotes
“FX pass-through to inflation remains almost negligible, as has been the case in the last months, while activity disappointed consensus forecast, again”.
“Indeed, the low inflation prints together with soft economic activity momentum (our economic activity surprise indicator for Mexico remains in negative camp) have prompted a shift in the Banxico authorities, who have toned down their hawkish stance”.
“Therefore, and despite a more rangebound USD, the MXN has underperformed most Latin America peers month-to-date”.
“That said, in the short-term the MXN continues to look cheap to coincidental risk metrics, and soft US data suggests a likely correction from lows”.
“The relative cheapness the currency lingers, as our short-term valuation models continue to screen a cheap MXN in particular vis-à-vis the USD”.