LATAM FX: Price Signal Summary – USDMXN Support Remains Intact
Feb-06 14:22
- A volatile session marked Monday’s activity in USDMXN. The trend structure remains bullish and the move above 20.9382, the Jan 17 high, marks 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.
- A corrective cycle 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. On the upside, a reversal would refocus attention on 6.3165, the Dec 18 high and the bull trigger. Initial resistance is at 5.9470, the 50-day EMA.
- A medium-term uptrend in USDCLP remains in play and recent weakness is considered corrective. The pair has breached the 50-day EMA. A clear break of the average highlights potential for a deeper retracement and opens 966.86, the Dec 6 low. This level has been pierced, clearance of it would open the 960.00 handle. For bulls, a resumption of gains would refocus attention on 1020.18 and 1026.48, the 1.236 and 1.382 projection points of the Nov 7 - 12 - Dec 6 price swing. Initial resistance to watch is 989.10, the 20-day EMA.
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BONDS: J.P.Morgan Enter Longs In Bunds, More Cautious In GBP Rates
Jan-07 14:21
J.P.Morgan write “trade war/tariff uncertainty from US Trump policy remains a downside risk to Euro area growth and given the recent back up we now turn bullish on Euro duration (receive 1Yx1Y ESTR, enter longs in 10Y Bunds).”
- They think that the “heavy January supply calendar is already baked into intermediate German yield valuations.”
- Meanwhile, in the UK, they believe that “valuations in GBP rates are cheap vs. our BoE forecast (~60bp of easing priced over 2025 vs. J.P.Morgan’s 100bp forecast)” but “are more cautious on entering outright longs in GBP rates given the fiscal easing announced in October adds uncertainty over the path of BoE easing.”
EGB SYNDICATION: Italy 10-year Aug-35 BTP / 20-year Apr-46 Green BTP Mandate
Jan-07 14:20
- "The Republic of Italy has mandated Banca Monte dei Paschi di Siena S.p.A, BNP Paribas, Citibank Europe Plc, Crédit Agricole Corp. Inv. Bank, NatWest Markets N.V. and UniCredit S.p.A for a dual tranche syndicated issuance of a new 10-year BTP due 1 st August 2035 and a €5 billion no-grow issuance of a new BTP Green due 30th April 2046." Source: MEF
- We had noted that we thought there would be an Italian syndication this week and that we would see a new 10-year BTP launched in January (but we had thought the 10-year launch would be via auction and that we would have seen a 15-year via syndication this week).
- We pencil in a transaction tomorrow with E10bln for the 10-year tranche in addition to the E5bln WNG size for the new green 20-year (the 20-year area was one we had highlighted as the potential for a new green BTP).
EQUITIES: EU Tech Index is extending gains
Jan-07 14:09
- The upside continuation in US Equities, these are small slow moves, help the European Tech sector {SX8P Index} back towards it earlier intraday high.
- The initial rally in Tech stocks started Yesterday after Microsoft said that it planned to spend $80bn on AI centers this Year.
- SX8P is breaking above 850.00, the highest traded level since late July, and next resistance is seen further out, up to 864.89.
