Gives risk assessment from NAFTA
- Mexican sectors at highest risk to negative credit pressure in post-NAFTA framework would include auto parts, diversified manufacturing, real estate and retail companies
- Structural Mexican peso devaluation and slowdown in growth of Mexico’s economy are considered likely outcomes should NAFTA come to an end
- With no alternative deal should NAFTA be terminated, export tariff guidelines between Mexico, US and Canada to likely default to WTO rules
- US federal level elections in July and November respectively could make reaching a deal on NAFTA, ratifying it more difficult]
The USDMXN trades more toward the lower extreme of the range from the 2017 high to the 2017 low. However, the price trades between the 200 day MA below at 18.46327 and the 100 day MA above at 18.7739.
If the NAFTA falls apart, I would anticipate a move back above the 100 day MA and a move back toward the 19.73785 midpoint (and highs from December). Right now, the market seems to be pricing in some sort of success (and not a total collapse).