COLOMBIA: BanRep Minutes Due At 2200GMT/1700ET
- The minutes to BanRep’s Jan 31 MPC meeting are likely to emphasise the need for caution in ensuring the continuation of the disinflation process, while acknowledging the need for further rate cuts ahead. At that meeting, BanRep kept its policy rate unchanged at 9.50% in a split vote (with one member voting for a 25bp cut and one for 50bp) amid concerns over inflation risks and rising inflation expectations. See the MNI review of the meeting here.
- In the minutes, Goldman Sachs will be looking for an update on whether some hawkish Directors still see significant risks of FX passthrough given the sustained COP outperformance since the December meeting. They will also look for a discussion on the asymmetric response of inflation expectations to the larger-than anticipated minimum wage hike, as well as any discussion on the potential implications of the global geopolitical and trade tensions and a strong dollar on the domestic inflation dynamics.
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EURUSD TECHS: Corrective Bounce
- RES 4: 1.0825 High Nov 7
- RES 3: 1.0630 High Dec 06
- RES 2: 1.0543 50-day EMA
- RES 1: 1.0458 High Dec 30
- PRICE: 1.0382 @ 18:17 GMT Jan 6
- SUP 1: 1.0226 Low Jan 2
- SUP 2: 1.0201 61.8% of the Sep ‘22 - Jul ‘23 bull leg
- SUP 3: 1.0198 3.0% Lower Bollinger Band
- SUP 4: 1.0167 2.0% 10-dma envelope
The trend condition in EURUSD remains bearish and Monday’s strong gains are - for now - considered corrective. Last Thursday’s sharp sell-off reinforces current conditions and note too that moving average studies remain in a bear-mode position, highlighting a dominant downtrend. The 20-day EMA, at 1.0414, has been pierced. The next resistance to watch is 1.0458, the Dec 30 high. The bear trigger has been defined at 1.0226, the Jan 2 low
PIPELINE: $8.5B Mexico 3Pt Leads US$ Debt Issuance
- Date $MM Issuer (Priced *, Launch #)
- 01/06 $8.5B #Mexico $2B 5Y +170, $4B 12Y +230, $2.5B 30Y +255
- 01/06 $2.75B #NAB $750M 5Y +50, $750M 5Y SOFR+79, $1.25B 11NC10 +130
- 01/06 $1.75B #JBS $1B 10Y +135, $750M 30Y +162.5
- 01/06 $1.5B #Southern Cal Edison $850M 10Y +85, $650M 30Y +108
- 01/06 $1.5B #AerCap Aviation $750M 3Y +75, $750M 7Y +98
- 01/06 $1.5B #Williams Cos $1B 10Y +100, $500M 30Y +120
- 01/06 $1B #India Export-Import Bank 10Y +100
- 01/06 $900M #John Deere Capital 00M $2Y +25, $500M 3Y +35
- 01/06 $800M #Corebridge Funding $500M 3Y +58, 3Y SOFR+75
- 01/06 $750M #Sixth Street Lending 5Y +185
- 01/06 $600M #RGA Global Funding 5Y +85
- 01/06 $500M #Lincoln Financial 5Y +88
US-CHINA: Trump Faces Uphill Battle To Reduce China Trade Deficit
A recent report from Axios illustrates the 'historical headwinds' US President-elect Donald Trump is facing if he is to successfully reduce the US trade deficit with China, noting the trade deficit with China “has been larger than $200 billion since 2005."
- Axios: "It reached a record high of $418 billion in 2018, Trump's second year in office…. The tariffs imposed on China during the first Trump administration, which were then kept in place by President Biden, did relatively little to change that dynamic. During Trump's first term, when imports fell, exports fell too, blunting the effect on the trade deficit.”
- Axios adds: "For the time being, the market seems to be reasonably sanguine when it comes to the threat of a trade war. Maybe that's because no such thing has happened in the lifetimes of today's traders, and maybe it's because the sheer force of money flowing between China and the U.S. seems impossible to significantly disrupt..."
Figure 1: US Trade with China, 1992-2004
Source: Axios, USA Trade
