Mexican Peso Undervalued, Set for Gains in 2013
Mexican Peso Undervalued, Set for Gains in 2013
DXY, USD, GBP, EUR, AUD, CNY
The undervalued Mexican Peso is poised to strengthen, particularly against overvalued counterparts such as the Australian Dollar AUD, it is very rich at any valuation metric now, as a mean-reversion trade, there is much to consider in a Long Peso-Short Australian Dollar position.
The USD may start Y 2013 softer Vs the EUR and GBP amid prospects for more aggressive expansion of the Federal Reserve’s balance sheet, even as Europe muddles along with its debt burdens.
The EUR could trade toward 1.35 and the GBP toward 1.65, the USD may subsequently recover, as the market anticipates that the US economy will strengthen after Q-1, and that the European debt crisis will come back to the front burner.
The CNY may also appreciate amid China’s continuing efforts to “internationalize” its currency.
Note: a recent agreement with South Korea to activate bi-lateral swap lines to promote trade settlement in local currencies as a model for additional arrangements.
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Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.
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