The eye-catching swing in Mexico’s current account, from a small deficit in Q2 to a huge surplus in Q3, was driven by a much stronger rebound in goods exports than imports last quarter. While the current account is likely to narrow in the coming quarters, we think it will remain in a healthy surplus which underpins our view that the rally in the Mexican peso has further to run. Elsewhere, we think there is more to the surge in Brazilian payrolls than meets the eye. A look at broader measures of employment reveal a bigger hit to the labour market – particularly in the informal sector.
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