LATAM FX: Price Signal Summary – USDMXN Remains Above Support
Feb-13 14:14
- USDMXN is in consolidation mode and continues to trade below the Feb 3 high. The trend structure remains bullish and the recent move above 20.9382, the Jan 17 high, marked a resumption of the uptrend. The move higher also highlights the possible end of a sideways trend that has been in place since early November 2024. Moving average studies are in a bull-mode position, highlighting a dominant uptrend. The focus is on a climb towards 21.4007 and 21.5807, the 3.00 and 3.236 projections of the Sep 18 - Oct 1 - 4 ‘24 price swing. Key support has been defined at 20.1343, the Jan 24 low. A clear break of this level would highlight a potential reversal. This would open 19.7618, the Nov 7 ‘24 low.
- A bear cycle in USDBRL remains in play and this signals scope for a continued retracement. The 50-day EMA has been breached and this has been followed by a break of 5.8675, the Dec 12 low. Sights are on 5.7231, the Nov 13 ‘24 low, and 5.6340, the Nov 7 low. On the upside, a reversal would refocus attention on 6.3165, the Dec 18 high and the bull trigger. Initial resistance is at 5.9163, the 50-day EMA.
- USDCLP remains in a bear-mode condition. The pair has recently breached the 50-day EMA. The clear break of the average highlights potential for a deeper retracement. Note too that the pair has also traded through 966.86, the Dec 6 low, and the 960.00 handle. This reinforces current bearish conditions and opens 940.35, the 61.8% retracement of the upleg between Sep 27 ‘24 - Jan 3. Initial firm resistance is seen at 981.29, the 50-day EMA.
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US TSY OPTIONS: Large Mar'25 10Y Call Buy
Jan-14 14:12
- +50,000 TYH5 108.5 calls, 27 vs. 107-08.5/0.31%, total volume just over 57,000 - exceeding open interest of 31,317 coming into the session
GILTS: Still Under Pressure
Jan-14 14:09
Gilts edge away from recent session lows, although markets seem keen to continue to fade rallies at this stage, with Chancellor Reeves offering little new in the Commons today.
- Reeves conceded that the UK is facing “economic headwinds”, while stressing the need to go further to kickstart growth and pledging to meet the fiscal rules at all times. A reminder that her future in the role is in doubt
- Futures as low as 89.15, last 89.23.
- Bearish technicals intact, initial support at cycle lows of 88.96.
- Yields little changed to 2bp higher, curve bear steepens.
- 10s & 30s within 3.5bp of cycle highs, located at 4.921% & 5.473%, respectively.
- Tomorrow’s 10-Year gilt supply is eyed, although today’s 30-Year I/L supply saw decent enough demand.
- CPI and comments from BoE dovish dissenter Taylor also due Wednesday.
FOREX: EURGBP Rally Extends, Focus Turns to UK CPI Release
Jan-14 14:06
- Sterling weakness continuing to stand out in G10 currency markets, as EURGBP extends session gains to 0.5%, registering a fresh two-month high in recent trade ~0.8443, helped by the quick fade of GBPUSD strength following the soft US data release.
- Price action for EURGBP narrows the gap to the next target of 0.8448, the Oct 31 high and a reversal trigger from a technical perspective. Further upside would signal scope for a move towards 0.8494, the August 26 high.
- The next key input for the Pound will be UK CPI, released tomorrow at 07:00 GMT, with focus on the services Y/Y figure for which consensus stands at a slightly softer 4.8% (vs 5.0% November). Our full preview for the release will be published shortly.
