Forex - GOOD MORNING Latam! (FX HIGHLIGHTS BRL MXN ARS CLP COP PEN)...


 11:32 (GMT) 13 Mar

  [Forex Highlights]

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RECAP CURRENCIES, DATA AND EVENTS

Regional Backdrop

Asian currencies posted mixed performances on Wednesday. India rupee was in modest gains of 0.28% against the dollar. Despite a rebound in India's February CPI, April rate cut expectations still remain on the table. The Philippines peso regained some lost ground after being hit by dovish comments by the central bank governor, up by 0.25% against USD. On the flip side, KRW lost by 0.26%. That was followed by CNH (-0.18%), MYR (-0.15%). Other currencies were relatively stable.

News and FX

Asia:

+ Indonesia: President "Jokowi" said he was considering forming new ministries to tackle a decline in investment and weak export growth. ~ JP

+ India: The Finance Ministry may borrow around 60 per cent of the Rs 7.1 lakh crore budgeted gross borrowings for fiscal 2019-20 in its first half (H1) from the market. ~ ET

+ USD/CNH: USD/CNH slid below the 6.7100 level and printed a 1-week low at 6.7057 at the start of Wednesday's Asian session. The decline was partly due to the weaker USD. However, pair recovered slightly and printed an intra-day high at 6.7212 at last look. Thursday will see the release of China's FAI, IP and retail sales data. A slight weakening in IP and retail sales growth are expected, which may pose upside risks for the pair. PBoC fixed mid-point at 6.7114 vs. previous close of 6.7098. USD/CNY opened lower at 6.7051 and slid further to print a 1-week low at 6.7042. 1Y NDFs rose to an intra-day high at 6.7467.

Europe news and FX

GOOD MORNING Latam! (FX HIGHLIGHTS BRL MXN ARS CLP COP PEN)... (0101-JVRQ-C01)

+ The USD was generally a little softer in a quiet European morning, with GBP leading the way. GBP hit its low point before May's defeat last night, and has edged higher through the morning on the expectation that a delay to Brexit will be called for by the end of the week. EUR/USD also moved higher through the morning, helped a little by the stronger than expected EU industrial production data for January, which showed a 1.4% m/m rise following the 0.9% decline in December. Italian unemployment data was less positive, rising to 10.6% in Q4 from 10.3% in Q3, the first rise since Q4 2016.

+ Otherwise, FX markets were quiet, with the JPY slightly offered and higher yielders modestly bid. EUR/NOK and USD/CAD both moved slightly below yesterday's low, helped by a firm oil price, but otherwise all G10 currencies remained within yesterday's ranges

Bonds and equities

+ Some consolidation into European and later US supply, as market pauses for breathe to digest Brexit path, gilt yields touch off the lows into expected vote against no-deal. PGBs stay firm, BTPs give some ground into auctions. Long end OATs underperform.

US DATA

GOOD MORNING Latam! (FX HIGHLIGHTS BRL MXN ARS CLP COP PEN)... (0101-JVRQ-C03)

Feb PPI data is released today, where we expect to see gains of 0.2% both overall and ex food and energy, with energy stabilizing after 3 straight sharp declines.

GOOD MORNING Latam! (FX HIGHLIGHTS BRL MXN ARS CLP COP PEN)... (0101-JVRQ-C02)

Also due today are Jan durable goods orders where we expect a 0.3% decline with a modest 0.2% increase ex transport.

EMGE Europe:

GOOD MORNING Latam! (FX HIGHLIGHTS BRL MXN ARS CLP COP PEN)... (0101-JVRQ-C04)

The ruble continued to strengthen at the beginning of Wednesday's session, outperforming other EMEA currencies with the USD/RUB temporarily falling to 65.52. The currency still benefitted from higher oil prices in the aftermath of the data from the American Petroleum Institute showing that U.S. crude stocks dropped by 2.6mn barrels last week compared to the expected 2.7-3.0mn barrel increase. But we continue to think that the ruble will come under pressure in the near term because of more substantial FX purchases by the CBR and bigger external debt repayments, with the USD/RUB potentially breaking the 65.95 resistance level.


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