The Mexican economy grew surprisingly strongly in the third quarter, according to the first estimate. Instead of 0.6%, according to the Bloomberg median, it grew by almost 1% quarter-on-quarter, the highest rate in a year, Commerzbank’s FX analyst Michael Pfister note.
Risk of Trump becoming president weighs on peso
“This was probably mainly due to a surprisingly strong increase in agricultural products, which seem to have recovered from the natural disasters in the first half of the year. However, one should not hope that this means the end of Mexico’s period of weakness. It is more likely that this was an outlier and that growth in the coming quarter will be more in line with the recent trend.”
“Despite the surprisingly good figures, the Mexican peso did not really benefit from them. In fact, USD/MXN hit a two-year high shortly after the data was released. For now, the peso is focused on other things: the more likely it becomes that Donald Trump will become the new US president, the more the peso will come under pressure.”
“This is because significant tariffs against Mexico become much more likely. So it should come as no surprise that the exchange rate is unlikely to react to Mexican news in the coming days.”