One dynamic to keep an eye on is the impact on markets of US Republican Primaries. The underperformance of the Mexican Peso since the start of the week may be indicating markets are pricing in a larger chance of Donald Trump winning the presidency after Ron DeSantis endorsed him. 

Trump won the New Hampshire primary on Tuesday, securing 55% of votes and casting serious doubt on the future of Nikki Haley’s campaign. It all seems rather premature, but Banxico is also on the brink of a rate cutting cycle which can compound to keeping the Peso soft. This should not translate into a one-way direction for the MXN though, we still expect to see high demand in the dips, not least due to the preserved carry attractiveness and our view of a US Dollar decline.