Higher cross-market volatility has pummeled the Mexican Peso. Economists at ING analyze MXN outlook.
An unwind of the carry trade will provide some natural support to the JPY
Cross-market volatility is picking up sharply which will continue to prompt an unwind of carry trade strategies. Here, the carry trade's former darling – the Mexican Peso – is getting hit hard.
USD/MXN looks as though it could correct to the 18.50/18.70 area before the dust settles.
An unwind of the carry trade will provide some natural support to the Japanese Yen and continue to provide headwinds to other popular high-yield currencies in Latam (Brazil and Colombia), Europe (Hungary) and Asia (Indonesia).
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