Wen you take 2 North American currencies like the CAD and MXN, you can see the tight correlation. But what has happened in the USD/CAD is we have seen a strong depreciation of the pair as crude oil prices have rebounded. On the other hand, the USD/MXN has barely pulled back as the USD/CAD has corrected. Matter of fact, the USD/MXN is within striking distance of it’s multi-year highs.

Banxico meets today, and the market doesn’t expect much change from the CB. Last week, Governor Carstens said the central bank is weighing the weak economy’s need for low interest rates and to divert pressures if the Fed decides to hike rates. Those types of dovish comments could push the USD/MXN higher in the near term. Or, if the USD starts to bounce against other major currencies, that could be the catalyst to drive the USD/MXN back to the highs as well.

Blake Morrow

Chief Currency Strategist, Wizetrade