The chart below shows the REER MXN Index (white) and the U.S. CESI (yellow, advanced by 30 days), both measured by Citi
U.S. macroeconomic sentiment has been in a downtrend since late last year. Mexico's beta to the U.S. economy was not as evident as it is today. The U.S. CESI chart leads the peso REER by 30 days, the latter peaked in March before the peso followed lower
This development coincides with a widening of the rate gap between U.S. and Mexico (March banxico rate cut) and the spike in MXN risk premium derived from domestic risks
However, U.S. economic activity was a driver of peso weakness even before the June Mexico election
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