USDMXN. P-Modeling Pt A. The Peso Derivative Safe Haven for USD Welcome Hyperspace Travelers,
This is a time-series analysis of the macro 1 week timeframe of USDMXN.
It is of my opinion that the Peso is going to see a nasty hyperinflation cycle.
TP: 31.1
In previous instances, a rising DXY is a catalyst for a rising Peso; as weight of the co-variance of R becomes redistributed fundamentally.
A rising USD, at specific cyclic points, proposes that a major US equities crash, paired with a re-weighting of forex co-variance will cause a hyperinflation cycle in the Peso.
In a way, in 2008-2009, it helped strengthen the Peso.
In 2020, it also helped strengthen the Peso.
I say strengthen because weighted distributions will allow the Peso to have more "weight" against other currency pairings. This is a hallmark feature of strength. Higher weight distribution of co-variance of the overall monetary pool into Peso makes it stronger.
Think of Peso as a derivative. For many years, the Peso has slowly accumulated "weight" from the primary pairings against USD.
Upon a substantial rise of DXY. The MXN Peso becomes a derivative safe haven for the USD. Thus we hyperinflate it. As previously shown at times of DXY strength 2008 and 2020.
Overall this is great for the Peso on the longer term scale. But not so great for the short term of the Peso for Mexican citizens.
We can see after the hyperinflation we engage in a few years of re-equalizing the slope at 32 degrees.
I may absolutely be wrong. But I really think this makes perfect sense.
Thanks for Pondering the Unknown with Me,
Glitch420
