EM LATAM CREDIT: MNI EM Credit Market Wrap - LATAM (20 Feb)

• RES 4: 1.4669 2.0% 10-dma envelope
• RES 3: 1.4564 3.500 proj of the Oct 17 - Nov 1 - 6 price swing
• RES 2: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
• RES 1: 1.4516 Intraday high  
• PRICE: 1.4363 @ 16:23 GMT Jan 21 
• SUP 1: 1.4261 Low Jan 20
• SUP 2: 1.4230 50-day EMA
• SUP 3: 1.4120 Low Dec 11 
• SUP 4: 1.4011 Low Dec 5

USDCAD price action is volatile this week. A sharp sell-off Monday resulted in a print below support at 1.4280, the 20-day EMA. Price has also traded through the 20-day EMA, at 1.4359. The pullback was short-lived and Tuesday’s reversal higher has delivered a fresh trend high of 1.4516. This highlights the fact that the uptrend remains intact and a continuation higher would open 1.4539, a Fibonacci projection. 1.4230, the 50-day EMA, marks key support.     

The Treasury curve bull flattened Tuesday in the return to cash trade after Monday's holiday, with Trump administration policy remaining the focus after the presidential inauguration.

• TY futures had rallied Monday (amid the cash close), with gains peaking in overnight trade Tuesday, as markets caught up to varying Trump tariff headlines (President Trump clarified Monday his administration may impost 25% tariffs on Mexico and Canada at the beginning of Feb).
• Data was limited: the January Philly Fed non-manufacturing survey was soft, and coming out alongside a below-expected Canadian CPI figure, it helped a nascent morning bid for Treasuries, but ultimately pulled back thereafter with futures closing fairly flat to Monday's early close.
• With 2025 Fed rate cut expectations fairly static (and the FOMC is in its pre-January meeting blackout period), the Treasury short end remained anchored.
• A lack of movement in the 2Y segment means the Treasury curve is as flat as it's been this year across key segments: 2s10s are -5.2bp at 28.6bp (entered 2025 at 32.5bp, January high of 42.9bp); 2s5s -3.2bp at 11.2bp (opened 2025 at 13.5bp).
• Wednesday's data calendar remains light, with MBA mortgage data and the December Leading Index - more focus will be on $13B 20Y Bond reopening auction, as well as a Fox interview with Pres Trump airing after Wednesday's cash close.
• Latest cash levels: The 2-Yr yield is down 0.9bps at 4.2741%, 5-Yr is down 4.1bps at 4.3904%, 10-Yr is down 6.3bps at 4.5642%, and 30-Yr is down 6.4bps at 4.7927%. The Mar 25 T-Note future is up 7.5/32 at 108-25, having traded in a range of 108-085. to 109-04.

• RES 4: 0.6429 High Dec 12
• RES 3: 0.6384 High Dec 13               
• RES 2: 0.6333 50-day EMA   
• RES 1: 0.6302 High Jan 6
• PRICE: 0.6261 @ 16:23 GMT Jan 21 
• SUP 1: 0.6131 Low Jan 13 and the bear trigger    
• SUP 3: 0.6100 Round number support
• SUP 3: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
• SUP 4: 0.5994 1.618proj of the Sep 30 - Nov 6 - 7 price swing

A bearish trend condition in AUDUSD remains intact and the latest recovery appears corrective. The pair has recently breached 0.6179, Dec 31 low, maintaining the price sequence of lower lows and lower highs. Moving average studies are in a bear-mode position too. Scope is seen for a move towards 0.6100. Resistance at 0.6233, the 20-day EMA, has been pierced. The next resistance to watch is 0.6333, the 50-day EMA.