bridge21 weekly rate update

The USD:MXN rate is solidly above 20 MXN to 1 USD, despite key rate increase on crashing crude oil prices and inflation. Bitcoin’s rally breaks 50k USD, edging closer to the 64k USD all-time high.

Short-term USD:MXN forecast

Last week we forecasted that “we expect modestly higher rates from here.” We now have modestly higher rates!

Banxico raised its key interest rate 25 basis points to 4.5% last week, but this did little to stop the fall of the MX Peso against the US Dollar. Slouching crude oil prices (Mexico is a major petroleum producer and exporter to the United States) along with inflation fears hit the peso hard.

The US Fed is holding its annual meeting in Jackson Hole, Wyoming virtually this Thursday. Announcements coming out of that meeting are likely to impact exchange rates as well as broader markets. Keep an eye out for price action early this week as it is likely to telegraph the outcome of Thursday’s meeting.

We think a correction is likely this week, with a modest dip in exchange rates. That said, if rates continue to rise above 20.7:1 levels, all bets are off and higher rates are likely.

Bitcoin just keeps on going up!

Bitcoin’s rally has gone higher than we expected. We still feel lower prices are more likely, but the closer we get to 64k USD (the prior all-time high), the less confident we are in this prediction.

Longer-term USD:MXN rate forecast

Our long-term forecast is still higher for the USD:MXN exchange rate through 2021.

Best regards,

Will -bridge21.com

The content in this update is for informational purposes only. You should not construe any information or other material in this update as legal, tax, investment, financial, or other advice. While we took care to share correct information from reputable sources, bridge21 cannot guarantee the accuracy or timeliness of the information.