FOREX: USDMXN Rises 1% as US/Mexican Officials Discuss Trade
Feb-19 17:52
- The USD index is firming for a second consecutive session, with the likes of EUR and GBP underperforming in G10. Comments from President Trump on Zelensky have weighed on EURUSD, reflective of the souring sentiment towards how the potential Russia/Ukraine negotiations might progress.
- EURUSD continues to press towards 1.0400, placing weight on EURJPY (0.65%), which continues to hover near session lows as we approach the European close.
- Overall, EURJPY has pulled back from its recent high, and resistance at 160.68, the 50-day EMA, remains intact. A stronger reversal south would refocus the attention on 155.61, the Feb 10 low and a bear trigger. Furthermore, a trendline drawn from the August 2022 lows currently intersects just above this level, bolstering the significance of this area of support.
- UK inflation rose at the fastest pace in almost a year in January, outpacing even the Bank of England's expectation for a move higher. However, the small downside surprise in services inflation provided a cloudy signal for GBP, which has been dominated by broader dollar sentiment. As such, GBPUSD has slipped back below 1.2600, but overall is holding onto its recent gains.
- ZAR weakness was notable in EM amid the adjournment of the budget delivery, prompting a firm rally for USDZAR (+0.91%). This has weighed on the EM basket on Wednesday, with similar weakness being noted for the Mexican peso.
- USDMXN has risen a little over one percent on the session, to trade around 20.45 at typing. Key support at 20.1343 remains intact and the currency will remain particularly sensitive to developments in Washington, where US and Mexican officials are discussing the future trade relationship.
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OPTIONS: Larger FX Option Pipeline
Jan-20 17:44
- EUR/USD: Jan22 $1.0345-50(E1.6bln), $1.0500(E1.1bln); Jan23 $1.0295-00(E2.7bln), $1.0400(E1.8bln), $1.0435-40(E1.0bln); Jan24 $1.0350(E1.4bln)
- USD/JPY: Jan22 Y155.50($1.2bln); Jan23 Y155.00($1.5bln)
- AUD/USD: Jan22 $0.6210(A$2.1bln)
- USD/CAD: Jan23 C$1.4450($1.1bln); Jan24 C$1.4380($1.4bln)
- USD/CNY: Jan23 Cny7.5000($1.9bln); Jan24 Cny7.4500($1.4bln)
US: Trump Inauguration Speech Confirms Reporting On Exec Order Strategy
Jan-20 17:42
US President Donald Trump's inauguration speech has largely confirmed reporting ahead of today's swearing in ceremony. The speech contained few surprises and hit many of his preferred talking points.
- Trump indicated that today's slate of executive orders will primarily pertain to energy and border security. He confirms that he will declare an 'energy emergency' today that will help bolster oil and gas production.
- Trump says inflation was caused by "massive overspending and escalated energy prices", indicating the route out of inflation is to "drill baby drill."
- Trump says he will fill the Strategic Petroleum Reserve up "right to the top" and "export American energy all over the world."
- As expected, Trump also confirmed he will declare a national emergency at the US-Mexico border that will allow for the immediate enforcement of some hardline border security measures, including deploying military assets to the border and reinstating 'remain in Mexico'.
- He confirms that he will designate narcotics cartels as foreign terrorist organisations, raising the prospect of US military force within Mexico.
- Although today's actions don't appear to cover any trade or tariff policy, Trump says he "will begin an overhaul of the trade system," and confirms the establishment of the 'External Revenue Service'.
- Trump also reiterates his desire to reassert US control over the Panama Canal.
- Trump says he will direct his Cabinet to "marshal the best powers at their disposal" to "defeat inflation" and "bring down costs and prices".
US: Trump Administration Issues Memo To GOP Lawmakers Outlining Priorities
Jan-20 17:17
The newly minted administration of US President Donald Trump has sent a memo to Republican lawmakers outlining immediate priorities for the Republican government.
- The memo is broken down into four sections, 'Make America safe again"; "Make America affordable and energy dominant again"; "Drain the swap"; and "Bring back American values".
- Some key items in the memo: "The Armed Forces, including the National Guard... will be deployed to the border to assist existing law enforcement personnel."
- "President Trump will begin the process of designating cartels as foreign terrorist organizations and use the Alien Enemies Act to remove them."
- "President Trump will declare an energy emergency and use all necessary resources to build critical infrastructure."
- "The President will unleash American energy by ending Biden’s policies of climate extremism, streamlining permitting, and reviewing for rescission all regulations that impose undue burdens on energy production and use, including mining and processing of non-fuel minerals."
- "President Trump will withdraw from the Paris Climate Accord."
- "President Trump’s energy policies will end leasing to massive wind farms..."
- "President Trump will announce the America First Trade Policy."
- Trump is currently delivering his inaugural address, stating that his presidency will face challenges, including a crisis of trust.
- At the conclusion of the speech, Trump will decamp to a room adjacent to the Senate chamber where he will sign the first of up to 200 executive orders prepared for his Day 1 agenda.
