EM LATAM CREDIT: "Fibra Uno 4Q Net Income Beats Estimates" - BBG

AUD/USD was a laggard through Monday's session. We currently track near 0.6295, losing around 0.30% against the USD. Intra-session lows from Monday were at 0.6275, with risk appetite impacted in the FX space by the sharp risk off in in equities, with the Nasdaq down over 3% amid fresh competition from AI developers in China. JPY and CHF rose against the USD, with yen a notably outperformer, up nearly 1%.

• The assumption that US firms will remain market-leaders in artificial intelligence was challenged with the rise of China's Deepseek - a product demonstrating that not only can AI be rolled out extremely cheaply and effectively, but also that the US' targeted chips sanctions are failing to contain China's tech industry. This drove the sharp tech led equity sell-off and hurt G10 and broader FX risk appetite.
• AUD/JPY fell to 96.75/80 before support kicked in. We current track around 97.25/30 (off around 1.30% for Monday's session), sub all key EMAs but within recent ranges.
• For AUD/USD technicals, the 50-day EMA remains at 0.6326 on the topside, a level we have breached in recent sessions but unable to be maintained.  Medium term technical conditions remain bearish for the A$. A clear break of the EMA would strengthen a short-term bullish condition and open 0.6384, the Dec 13 high. The key support and bear trigger has been defined at 0.6131, the Jan 13 low.
• The local data calendar has Dec NAB business confidence out today. The main focus will on tomorrow's Q4 CPI print.
• Finally note in the option expiry space, the following for NY cut later today: $0.6300-10(A$2.0bln). 

• Ahead of Thursday's ECB decision, Rabobank write that President Trump has not materially changed the outlook for the Eurozone economy for now, and so, "there is no reason to expect the ECB to change course at this juncture.”
• "The Governing Council increasingly expects inflation to converge to the 2% target in the course of 2025. This allows for another 25bp cut at the January policy meeting. However, uncertainty remains high.”
• “So, even though the ECB may be inclined to cut further in the coming months, we believe the ECB also wants to keep its flexibility. Lagarde will probably refrain from giving any guidance.”
• Rabobank see three 25bp cuts, to 2.25% in April, "based on our premise that underlying inflation will be a bit stickier than the ECB expects.”
• Specifically: “We still see the remaining gap between underlying inflation and the ECB’s target close more slowly than the Governing Council seems to anticipate." That could see the ECB "opt to delay the cut we have pencilled in for April until June.”
• “However, more so than the risk of delays, we see the risk that the ECB’s intended cycle to (about) 2% could be cut short. Much hinges on the policies of the new US administration, and just because Trump has not acted on his threats yet, that does not mean that he will not impose tariffs on Europe or other countries.”