“The Mexican peso trade has been a clear favorite of currency traders in recent months, owing to the country’s strong growth fundamentals, the Mexican economy’s apparent decoupling from the global economy, and the perception that the peso has been undervalued relative to other currencies and thus represents a good buy.
Recently, Societe Generale currency strategist Sebastian Galy wrote after returning from an investor trip, “If there as a ‘favourite currency’ amongst the investors I spoke with in North America, it was the Mexican peso.”
However, that interest may be waning.
The chart below shows the non-commercial long positions in the peso netted against short positions, per data from the CFTC’s weekly Commitment of Traders report.”
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