The Mexican peso will be highly influenced by the peace talks over the weekend in Pakistan, as it will be moving interest rate markets.
USD/MXN
The US dollar has drifted a little bit lower against the Mexican peso during Friday trading as we find ourselves piercing the 17.3 level, but ultimately this is a market that I think will continue to be very noisy and you do have to be somewhat careful with your expectations. Furthermore, keep in mind that the markets are going to be extraordinarily noisy in general as over the weekend we are going to be reacting to how the meeting between the Americans and the Iranians fares and that will have a major influence on risk appetite.
In this environment, the interest rate differential most certainly favors the Mexican peso, but if you start to see the US dollar spike in interest rates, it will spike here as well. That will be a rush to safety.
Risk Appetite and Geopolitical Influences
That should be a shorting opportunity given enough time, but I would get out of the way of it because quite frankly, we could get a couple of really strong US dollar days. In that environment, I don't look to buy it against the Mexican peso, I look to buy it against something that isn't going to cost you so much, like for example, the Canadian dollar.
So, in this environment, I do prefer shorting this market if I can, but I also recognize that I don't want to chase it heading into the weekend. If we can break down below the 17 pesos level, then I think it is good to go probably down to 16.5 pesos, but right now this all rests on the shoulders of a couple of people having a meeting in Islamabad.