MEXICO: USDMXN Edging Lower, Extends Weekly Decline to 1%

SX5E (20th June) 4700p vs (19th Dec) 4400p, sold the Dec at 17.30 in 20k vs 1.44k at 5034.00.

Yesterday’s OI data and price action in gilt futures extended on the early ’25 trend of gilt weakness and a move higher in open interest, indicating net short setting dominated from a positioning perspective.

• This has been the case in all but one session through early ’25 trade, with net long cover seen in the session that broke that theme.
• Today’s CPI-driven recovery looks set to end a run of 9 consecutive lower closes for gilt futures, with the recent increase in net shorts likely factoring into the rally.
• OI has risen by ~39K since December 31, with gilt futures falling by 316 ticks when comparing yesterday’s settlement to settlement levels at the end of last year.

• USDCHF is down a moderate 0.1% on the session, however the pullback from the 0.9201 cycle highs has now extended to roughly 1% amid the broader softening of the greenback from the Monday highs. It is worth noting that USDCHF came within close proximity of the key medium-term resistance area at 0.9224/44. Support is seen at 0.9063, the 20-day EMA.
• We noted earlier that BofA have recommended buying a 3m 0.92/0.9450 USDCHF call spread, citing "trade uncertainty, strong growth and policy divergence" behind a stronger Dollar, alongside bullish technical conditions and a forward discount / carry factors supporting the position.
  • For upside levels, BofA identify 0.9240, 0.9455 (Fibonacci retracement), 0.9720, and potentially parity, while the main risk they highlight is the dollar losing the "broad-based bullish momentum" in Q1'25. They believe if their "core view of a stronger USD at the onset of 2025 turns out to be right, USDCHF would likely have the least number of reasons to reverse its short-term uptrend."
• A reminder that Danske highlighted that recent CFTC data indicates positioning is pronouncedly long, underlining that market bets continue to look for further USDCHF upside.