CHILE: Deutsche Bank Sees One BCCh Cut This Year, Likely In Q3
Jan-29 19:21
- In Deutsche Bank’s view, the removal of BCCh’s easing bias signals a potentially extended pause that could last at least the first half of the year, consistent with market pricing. Given the mature stage of the normalisation cycle, lingering concerns over the short-term inflation outlook, cyclical position of the economy and a more troubling external backdrop, they still expect BCCh to validate its revamped forward guidance. Accordingly, DB still sees just one rate cut this year, likely in Q3.
- On rates, DB believes that Chile’s curve prices too high a neutral rate. Meanwhile, risks for policy adjustments are now two-sided, and there is likely to be more premium building in the curve. Premium is particularly low in longer tenors, where positioning could play a bigger role. Once the currency stabilises, possibly only with more clarity on US policies and stabilisation in China, DB believes BCCh could turn more dovish again. Overall, DB prefers to stay neutral and look for more premium to re-enter receivers in short-tenors (vs. US).
- On the FX, BCCh’s hawkish tilt should limit CLP funding, but the peso is exposed to copper and oil prices. On balance, CLP is fair vs. these drivers, but extreme positioning and valuations (both fundamental and financial) combined with the hawkish tilt favour some unwinding of CLP shorts, thus supporting downside in EUR/CLP.
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EURGBP TECHS: Monitoring Resistance At The 50-Day EMA
Dec-30 19:00
- RES 4: 0.8448 High Oct 31 and reversal trigger
- RES 3: 0.8376 High Nov 19 and a bull trigger
- RES 2: 0.8356 High Nov 27
- RES 1: 0.8317/29 50-day EMA / High Dec 27
- PRICE: 0.8297 @ 16:09 GMT Dec 30
- SUP 1: 0.8223 Low Dec 19
- SUP 2: 0.8203 Low Mar 7 2022 and a major support
- SUP 3: 0.8200 Round number support
- SUP 4: 0.8188 1.00 proj of the Oct 31 - Nov 11 - 19 price swing
EURGBP is holding on to the bulk of its recent gains. Resistance at 0.8317, the 50-day EMA, has been pierced - but failed to trigger a sharper move higher. A clear breach of the EMA would undermine the bear theme and highlight a stronger reversal. A resumption of the primary downtrend would pave the way for a move towards major support at 0.8203, the Mar 7 ‘22 low and the lowest point of a multi-year range.
US TSY OPTIONS: Scale Seller Mar'25 10Y Vol
Dec-30 18:54
- -10,000 TYH5 109 straddles, 209-211 ref 108-30.5
STIR: Update: Red Dec'25 SOFR Put Buyer
Dec-30 18:49
- Update, over +18,000 SFRZ5 95.00 puts 8.0 vs. 96.065/0.10%
