EM LATAM CREDIT: Republic of Argentina (ARGENT; Caa3pos/CCC/CCC): 4Q 2024 GDP

• RES 4: 158.87 High Jan 10 and a bull trigger   
• RES 3: 156.75 High Jan 23 
• RES 2: 155.89 High Feb 3 
• RES 1: 154.36/80 50-day EMA and a pivot resistance / High Feb 12       
• PRICE: 151.40 @ 16:15 GMT Feb 17
• SUP 1: 150.93 Low Feb 07 and a bear trigger 
• SUP 2: 149.69 Low Dec 9 
• SUP 3: 148.65 Low Dec 3 ‘24 and a key support 
• SUP 4: 148.01 Low Oct 9 ‘24     

USDJPY has pulled back from last week’s high. The latest move down highlights that - for now - resistance around the 50-day EMA, remains intact. The average is at 154.36. A clear break of the 50-day average is required to highlight a stronger bullish reversal. This would open 155.89, the Feb 3 high. Key support and the bear trigger is unchanged at 150.93, the Feb 7 low. Clearance of this level would resume the bear cycle that started on Jan 10.         

• RES 4: 0.8474 High Jan 20 and a key resistance    
• RES 3: 0.8420 76.4% retracement of the Jan 20 - Feb 3 bear leg  
• RES 2: 0.8388 61.8% retracement of the Jan 20 - Feb 3 bear leg  
• RES 1: 0.8378 High Jan 6   
• PRICE: 0.8312 @ 16:12 GMT Feb 17 
• SUP 1: 0.8297/8248 Low Feb 4 / 3 and a bear trigger
• SUP 2: 0.8223 Low Dec 19 and a key support  
• SUP 3: 0.8203 Low Mar 7 ‘22 and a lowest point of a multi-year range   
• SUP 4: 0.8163 123.6% retracement of the Dec 19 - Jan 20 bull leg 

EURGBP continues to trade in a range. The early February bounce still appears to have undermined a recent bearish threat. Attention is on 0.8378, the Jan 6 high and a key short-term pivot resistance. Clearance of it would strengthen a bullish condition and signal scope for a stronger recovery. For bears, a resumption of weakness would once again refocus attention on 0.8248, the Feb 3 low and bear trigger.    

• Tuesday’s January CPI report is the sole CPI release since the Jan 29 decision. The market currently sees marginally less than 50/50 odds of another 25bp cut on Mar 12, slightly leaning in favour of a pause, although US tariff deliberations are likely a more important factor.
• The initial 25% tariffs on all Canadian products except for 10% on energy products saw a 30-day postponement until Mar 4 after Canada agreed to bolster border security, whilst 25% tariffs specifically on steel & aluminium is currently set for Mar 10.
• With downside risks to Canadian growth, GDP data for Q4 and the January advance on Feb 28 should be watched increasingly closely after recent signs of prior monetary policy easing boosting activity.
• With those points in mind, Bloomberg consensus currently sees headline CPI inching a tenth higher to 1.9% Y/Y along with one tenth increases for both median and trim to 2.5% and 2.6% Y/Y respectively (BoC target range 1-3%).
• Remember that Senior Dep Gov Rogers downplayed the strength seen in CPI-trim at last month’s BoC press conference, saying the way it’s calculated has led them not to put much weight on it at this point in time.
• That leaves only one of its three 'new' core measures actively watched, CPI-median, having abandoned CPI-common earlier in the cycle. All else equal, we imagine this will start to see greater market focus on the more traditional core metrics such as CPIxFE and CPIX.
• Headline CPI will continue to be impacted by the two-month GST/HST holiday that began in mid-December, but median, trim and CPIX all account for indirect price changes.  
• Our crude “underlying” inflation measure – an unweighted average of median, trim, CPIX and CPIxFE, stood at 3.1% annualized in the three months to December for its first time above the target range since Dec 2023 (and despite CPIxFE biased lower by the tax holiday). However, the six-month run rate held at a more acceptable 2.4% annualized. 

Chart of recent trends: