Wednesday, October 24, 2012

Mid-Week Position Summary

Short USD/MXN @ 12.9000
Capital Ratio: 10.08 percent
I am all in on the peso after booking some modest profit on long GBP/USD positions earlier earlier in the week. Order filled right before a slight pullback to 12.98.  The longterm tread remains bearish with many investment houses upgrading their outlook on Mexico's peso.  The fundamentals remain strong with a growing Mexican economy, strong foreign demand for peso denominated assets,  sound fiscal policies by the central government, and a hawkish central bank.   The trade has nice positive carry and I intend to hold this position even if there is a large  short term pop in light of my strong capital position and ability to ride out losses.  I will target the 2011 low of 12.55 in the medium term (1-2 months) and look to get short again for the one to two year target of 11 pesos to the dollar. 

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