EM LATAM CREDIT: Mexico President Proposes Two Constitutional Reforms Today
From our MNI EM Markets Analyst:
"MEXICAN PRESIDENT SAYS SHE IS PROPOSING TWO CONSTITUTIONAL REFORMS TODAY" (Reuters)
"CONSTITUTIONAL REFORM WOULD SAY MEXICO WOULD NOT ACCEPT ANY "VIOLATION OF MEXICAN TERRITORY"
"CONSTITUTIONAL REFORM WILL NOT ALLOW ANY FOREIGN INTERVENTION IN INVESTIGATIONS OR PROSECUTIONS WITHOUT AUTHORIZATION IN MEXICO"
(Reuters)"Mexican President says second constitutional reform would harden punishments for arms trafficking, including for foreigners" (Reuters)
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US: Treasury Sec Nominee Bessent Clears Senate Finance Committee
The Senate Finance Committee has voted 16-11 in favour of Scott Bessent, President Donald Trump's nominee to serve as Treasury Secretary. Bessent's nomination will now be scheduled for a full confirmation vote on the Senate floor.
- In the Committee vote, two Democrats - Senator Mark Warner (D-VA) and Senator Maggie Hassan (D-NH) - voted in favour of Bessent's nomination, signalling that Bessent will be approved in a bipartisan Senate vote. However, Senate Minority Leader Chuck Schumer (D-NY) is unlikely to agree to fast-track Bessent's nomination as he did with Secretary of State Marco Rubio yesterday.
- It is unclear when a full vote will be scheduled, but Senate Majority Leader John Thune (R-SD) will likely tee up a vote this week. Thune has threatened to keep the upper chamber in session through the weekend to confirm key Cabinet officials, so expect Bessest to receive a relatively smooth pathway to confirmation, despite some Democrat concerns over his personal tax history.
- Ranking Democrat on the Finance Committee, Senator Ron Wyden (D-OR), told the panel that it was "troubling" that Bessent would take office while "not in compliance" with Treasury tax rules.
- Wyden: "My view is, you can’t have a Treasury Secretary who doesn’t abide by Treasury policy. That’s what you’d have on day one if Mr. Bessent is confirmed."
FOREX: EURUSD Back Above 1.0400, Monitoring Clear Break of Trendline Resistance
- EURUSD has been trading with a supportive tone across the US session and has risen back above 1.0400 in latest dealings. Elevated levels for major equity indices have likely been supportive of the broader dollar offer, while the lack of concrete details on tariffs for Eurozone countries may be bolstering the single currency relief rally.
- We have noted that the bounce so far appears corrective in nature, however, the latest bullish developments are being monitored closely. Most notably, the pair has breached the 20-day EMA, at 1.0346, and pierced trendline resistance at 1.0393, drawn from the Sep 30 ‘24 high.
- A clear breach of the line would expose the 50-day EMA at 1.0461, which closely coincides with the October 2023 low of 1.0448. Clearance of these levels would strengthen a bullish condition and would signal scope for a greater recovery to 1.0568, the Dec 10 high.
- Aside from Trump related risks, the Eurozone data calendar is headlined by the January flash PMIs on Friday. Data will help set the tone for sentiment heading into 2025, with questions still remaining around the likely pace and magnitude of ECB rate cuts later this year.
OPTIONS: Expiries for Jan22 NY cut 1000ET (Source DTCC)
- EUR/USD: $1.0345-50(E3.1bln), $1.0375(E826mln), $1.0400(E1.0bln), $1.0500(E1.1bln)
- USD/JPY: Y154.50-60($1.1bln), Y155.50($1.3bln), Y156.45($555mln)
- AUD/USD: $0.6210(A$2.1bln)
- USD/CAD: C$1.4500($829mln)
