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The Mexican Peso pauses in its recovery amid rising chances of Donald Trump winning the US presidential election.  Further attempts by deputies to limit the power of the Mexican judiciary also weigh on the Peso. USD/MXN pauses in its recent pullback and looks technically poised to begin a new leg higher, piercing the 20.00 level.  The Mexican Peso’s (MXN) recovery grinds to a halt on Friday as political risk in the form of US presidential election uncertainty and a new development in Mexico’s judicial-reform saga takes the wind out of bulls’ sails.  This adds to any weakness already caused by recent below-par macroeconomic data and any positive effects from a potential revival of the carry trade due to the depreciating Japanese Yen (JPY).   Mexican Peso falls foul to rise in political risk premia The Mexican Peso is feeling the heat from the increasing chances that Republican nominee Donald Trump could win the US presidential election on November 5.  “Polls in the battleground states have remained very tight and within the margin of error,” says Jim Reid, Global Head of Macro Research at Deutsche Bank on Friday. “For instance, an Emerson poll of several swing states yesterday had Trump very marginally ahead, including a 1pt lead in Pennsylvania and Wisconsin, and a 2pt lead in North Carolina,” adds Reid. Further, according to the model of leading US election website FiveThirtyEight, Trump now has a slightly higher 51% chance of winning. That said, the website’s master poll, which aggregates, averages, and weights polls according to recency, shows Harris still in the lead with 48.1% versus Trump’s 46.4%. Most betting websites also offer better odds of Trump succeeding.   A Trump win would spell trouble for the Mexican Peso. Trump has repeatedly said he will put higher tariffs on foreign imports and singled out…

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Filed under: News - @ October 25, 2024 9:25 am