Mexican Peso: Carry liquidation pressures LatAm currencies – MUFG

FXStreetOct 2, 2026 10:03 AM

View all comments（0）



MUFG’s Derek Halpenny notes that rising rates volatility is driving a broader unwind of EM FX carry trades, with LatAm currencies under particular pressure. USD/MXN has surged and MXN long leveraged positions are being squeezed as implied volatility jumps.

Volatility-driven unwind in LatAm FX

"We have been flagging the increased risk of the volatility in the rates market spreading to other markets and the increased risks of a broader liquidation of carry positions. EM FX is certainly seeing that now with significant moves in LatAm FX as carry liquidation intensifies."

"Since the middle of September USD/MXN has now jumped 8% and is the worst performing LatAm currency since the start of September. IMM positioning data explains why MXN is suffering. The latest data shows Leveraged Funds’ long position at the highest level since the start of 2023."

"This risk aversion could well have further to go. In G10, the Swiss franc and the yen were the top performing currencies yesterday and those moves could extend further."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Disclaimer: The information provided on this website is for educational and informational purposes only and should not be considered financial or investment advice.

Comments (0)

Click the $ button, enter the symbol, and select to link a stock, ETF, or other ticker.

Commenting Guidelines

Recommended Articles

Palantir Stock Price Forecast: Can PLTR Break $200 and Return to All-Time Highs Amid Rapid AI Business Growth?

TradingKey - After experiencing a noticeable pullback in the first half of 2026, Palantir's (PLTR) stock price has rebounded rapidly over the past few months.

Nvidia Stock Price Forecast: Stock Expected to Challenge $300 as Largest-Ever Buyback Begins

TradingKey - On September 28, Eastern Time, Nvidia (NVDA) shares bucked the trend and gained amid broader pressure on technology stocks, driven primarily by its newly announced massive stock buyback plan. On September 28, Nvidia announced that its board of directors approved an additional $150 billion for its existing share repurchase authorization, bringing the remaining buyback capacity to $235 billion. The company plans to execute the program by the end of fiscal year 2028, marking the largest buyback in U.S. stock market history. Following the announcement, Nvidia rose 1.68% on the day to close at $228.86, touching an intraday high of $233.21, while the Nasdaq Index fell 0.92% over the same period, demonstrating that the buyback news provided clear independent support for the stock.

Tesla Stock Price Prediction: Can TSLA Stock See a New Rally as Next-Gen Roadster Nears Launch?

TradingKey - Tesla (TSLA) is set to host a highly anticipated new vehicle launch. Tesla stated that the next-generation Roadster, originally scheduled to officially debut in Texas on October 1, has now been postponed to October 15. The model has experienced multiple delays since it was first announced in 2017 and is now re-entering the market spotlight.

US September Nonfarm Payrolls Preview: Job Growth May Cool, How Will US Stocks, Dollar and Gold React?

TradingKey - On Friday, October 2 (Eastern Time), the US will release its September nonfarm payrolls report. The market will focus on whether job growth can sustain August's rebound and whether the data will alter expectations for subsequent Federal Reserve rate hikes.

The Week Ahead: US August PCE and September Nonfarm Payrolls Take Center Stage, Micron Earnings in Focus

TradingKey - In the coming week (September 28 to October 2, ET), US markets will face the most concentrated macroeconomic data window between late September and early October. Key reports—including the US August PCE Price Index, September Nonfarm Payrolls report, ADP employment, JOLTS job openings, and the ISM Manufacturing Index—will be released in succession, providing fresh evidence for the market to gauge the Federal Reserve's next interest rate path.

Featured Tools