Before going into detail on the USDMXN, I wanted to take advantage of this end-of-half period to take a quick look at the main performers since the start of the year.

Let's start with the big losers: unsurprisingly, we find the Russian rouble, the Turkish lira and the yen. Less well known, but just as extraordinary, is the Argentine peso, which has lost over 40% against the euro and the dollar. At the other end of the spectrum, other South American currencies are also doing well, including the Mexican peso (MXN), the Brazilian real (BRL) and the Hungarian forint (HUF).

Does this ranking surprise you? On closer inspection, our podium is dominated by currencies offering the best overnight returns. Clearly, these are the currencies favored by traders as part of their carry strategies, as shown in the table below. Beware, however, of jumping into the lion's den without thinking things through. Initiating a position solely on the basis of the interest-rate differential can prove particularly risky for your portfolio. At the back of the pack are the TRY and RUB, whose rates are nonetheless particularly attractive.

(Source: Bloomberg)
The typical profile of a good carry trade operation is to find the currency that will not only pay you a return every night on the interest rate differential, but also move in the direction you expect. As a reminder, you buy the currency offering the highest rate and sell the other. To illustrate our view of the MXN, we therefore expect to see the USDMXN depreciate. Fortunately, this is precisely what has been happening since the break of 19.55, with an expected target around 15.94/92.
(Source: Bloomberg)