The key pairs are shorting the Mexican peso (MXN) against the Brazilian real (BRL), the Chinese yuan (CNY) against the Japanese yen (JPY), and the Thai baht (THB) against the Singapore dollar (SGD).
Alpine Macro highlights Mexico’s vulnerability to a second Trump term, given its growing trade surplus with the U.S.
The firm notes, “Mexico recently surpassed China as the largest exporter to the U.S.,” making it a potential target in any potential trade war. They explain that the Mexican peso, already under downward pressure, could weaken further if tariffs rise, whereas Brazil’s trade ties to the U.S. are minimal.
The Brazilian real is supported by favorable fundamentals, according to Alpine. As a result, they believe it presents a compelling counterpart in this trade.
Thailand’s economic recovery has lagged behind regional peers, leaving the baht exposed to downward pressure, particularly in light of Thailand’s easing stance.
Meanwhile, “Singapore’s economy has been on the verge of overheating,” prompting the Monetary Authority of Singapore to guide the SGD higher, according to Alpine analysts.
This policy divergence is said to create an attractive trade setup, as Singapore’s strong financial inflows and resilient economy contrast sharply with Thailand’s weaker fundamentals.
Alpine Macro says the CNY is susceptible to U.S. tariffs, with the currency potentially weakening to preserve China’s export competitiveness.
In contrast, the yen remains undervalued and “has been a ‘safe-haven’ currency,” which is seen as especially appealing if post-election uncertainty rises.
Additionally, they note that while China’s central bank continues easing, Japan’s Bank of Japan is one of the few globally still tightening, supporting the yen’s strength.
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