LATAM FX: BRL Outperforming, USDMXN Slips Below 20.00
Mar-14 13:47
- Regional currencies continue to trade in a resilient manner and the late European greenback selloff and more stable equities have assisted the likes of the Mexican and Chilean pesos to rise around 1% against the dollar. For USDMXN, this has resulted in a slide below the 20.00 handle, signalling scope for a move towards the Nov 07 low around 19.76.
- However, it is the higher beta Brazilian real that is outperforming, currently up 1% on the session. USDBRL is back below 5.75 and nearing in on last week’s lows at 5.7327. A continuation lower would open 5.6755, the Feb 18 low and the short-term bear trigger.
- Markets may turn their focus to next week’s BCB decision, where the Copom is widely expected to deliver another 100bp Selic rate hike on Wednesday to 14.25%, in line with the forward guidance. This would be the third successive 100bp move and take total tightening since September to 375bp.
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STIR: Next Fed Cut Not Fully Priced Until December Following CPI
Feb-12 13:47
Unequivocally hawkish market reaction to the firmer-than-expected CPI data.
- The next 25bp Fed rate cut is now not fully discounted until the end of the December FOMC. That move was fully priced through September ahead of the release, with 37bp of cuts showing through December pre-data.
- FFZ5 briefly prints 1.0 tick above its January low.
- SFRZ5 briefly prints 2.5 ticks above its January low.
BUNDS: Falls 41 ticks post US CPI
Feb-12 13:42
- Bund has fully closed the gap down to 132.34, and extended as low as 132.19 following the beat in the US CPI, it fell a total of 41 ticks post Data.
- Looking at Technical, focus will be on the Yield and the 2.50%.
- Today, reference 132.26, this level equates to 131.99.
US TSY FUTURES: BLOCK: March'25 2Y Post-Data Buy
Feb-12 13:41
- +10,000 TUH5 102-18, buy through 102-17.62 post time offer at 0834:05, DV01 $370,000. The 2Y contract has since traded down to 102-16.75 last (-5.62).
