PERU: BCRP Interest Rate Decision Due At 2300GMT/1900ET
- A reminder that the BCRP will announce its latest interest rate decision later, which is expected to be a close call as the central bank nears the end of its easing cycle. A narrow majority of analysts expect the reference rate to be left on hold at 4.75%.
- After pausing last month, latest inflation data keep the door open to a 25bp cut later, with headline inflation falling to its lowest level since September 2018.
- However, uncertainty about global trade policies and resilient domestic activity may prompt the BCRP to maintain its cautious stance and extend the pause for another month, especially with the policy rate already close to its neutral level.
- The full MNI preview with analyst views is here.
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CROSS ASSET: Dollar Pares Sudden Drop With Ukraine Headlines Reconsidered
Several contacts cited prominent headlines that Ukraine was contemplating swapping territory with Russia as part of a peace deal for USD selling in the last half hour of trade. MNI is not seeing any substantive headline driver (BBDXY falls 0.2% to 1298.78 low, bounces to 1300.35 last), which also sees Tsys bounce mildly while Equities inch higher.
- The coincident AFP headline that potentially triggered the strength in the Euro and Euro equity futures starting at 14:28ET - " Ukraine prepared to offer territory swap with Russia: Zelensky" - is actually a rehash of a Guardian interview with Zelensky that happened hours earlier.
- It's plausible the resurfacing of this news triggered algorithmic trading - the move has largely reversed. Otherwise we don't have much of an explanation from a headline perspective.
EURJPY: Pierces Key Support
- RES 4: 162.70 High Jan 28
- RES 3: 161.40 50-day EMA
- RES 2: 160.50 20-day EMA
- RES 1: 157.97/158.86 Low Feb 3 / High Feb 6
- PRICE: 157.62 @ 16:14 GMT Feb 11
- SUP 1: 155.61 Low Feb 10
- SUP 2: 155.19/15 3.0% 10-dma envelope / Low Sep 16 ‘24
- SUP 3: 154.42 Low Aug 5 ‘24 and key medium-term support
- SUP 4: 153.87 Low Dec 14 ‘23
Prices are off lows, but a bear cycle in EURJPY remains present and last week’s move down reinforces current conditions. The cross cleared 158.24, 76.4% of the Dec 3 - 30 bull cycle, and pierced 156.18, the Dec 3 low and key support. A continuation lower would open 155.15, the Sep 16 ‘24 low. Initial firm resistance to watch, and a pivot level, is 161.40, the 50-day EMA. The short-term trend is oversold, gains would allow this condition to unwind.
US TSY OPTIONS: March'25 10Y Put Sale
- -25,000 TYH5 109 puts, 28 recently, paper had bought 20,000 yesterday at 18-20
