MEXICO: January Inflation Data Scheduled, MXN in Steady Range
- January CPI data highlights the domestic calendar on Friday, where both headline and core inflation are expected to dip from the mid-January readings. As noted in yesterday’s Banxico statement, inflation sits at its lowest level since early 2021 and core inflation has remained close to its 2003-19 average. Data is due for release at 1200GMT/0700ET:
- Jan. CPI M/m, est. 0.31%, prior 0.38%
- Jan. CPI Y/y, est. 3.63%, prior 4.21%
- Jan. CPI Core M/m, est. 0.45%, prior 0.51%
- Jan. CPI Core Y/y, est. 3.69%, prior 3.65%
- With yesterday’s Banxico decision fully priced by markets, USDMXN has exhibited a very narrow trading range in the aftermath of the meeting. Spot remains in very familiar territory around 20.50 and overall, a bullish trend structure does remain in place following the strong rally seen on Monday. Bearish risks for the peso remain centred around the discussions with US officials regarding tariffs, and the potential for carry erosion that is expected through 2025.
- However, given the sharp reversal, short-term positioning and initial optimism for a broader trade agreement with the US, the downside for USDMXN could be vulnerable. Key support has been defined at 20.1343, the Jan 24 low. A clear break of this level would highlight a potential reversal.
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US: Review Of President-Elect Donald Trump's Mar-a-Lago Press Conference
US President-elect Donald Trump delivered a wide-ranging press conference at his Mar-a-Lago resort in Florida on January 7, touching on various issues from energy to his foreign policy ambition of carving out a new US sphere of influence from Panama to Greenland.
- Please find below a full summary of the presser with analysis of the key comments related to foreign policy, tariffs, energy, and legislation.
Full article: Trump Press Conference Review
GILTS: Long Futures Positioning A Potential Factor In Sell Off
Elsewhere, a reminder that our latest positioning indicator update (published yesterday) pointed to long positioning in gilt futures. That could be adding further fuel to the sell off.
GILTS: Further Selling
Further weakness in gilts accompanies pressure for GBP in FX trade, with the market in price discovery mode after finding fresh multi-decade highs in 30-Year yields and registering the highest level seen since ’23 in 10-year yields.
- Yields now 2.5-5.0bp higher across the curve, while futures trade as low as 90.75.
- Technicals for 10s & futures outlined in the prior post.
- No fresh UK headline triggers, but continued erosion of already limited fiscal headroom adds to wider pressure stemming from a reassessment of global term premium, hawkish U.S. data and a heavy start to ’25 IG supply, as well as medium-term structural headwinds for gilts.
- SONIA futures +0.5 to -9.0. Dec low in SFIZ5 untested. Nov low in SFIZ6 broken.
