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


 11:35 (GMT) 14 Jan

  [Forex Highlights]

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RECAP CURRENCIES, DATA AND EVENTS.

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

Europe FX and news -

+ EUR/GBP continued the recovery seen in Asia early in the European morning but was sold off from mid-morning after a brief rise above 0.8950. Markets were focused on UK press reports that the EU was expecting a request for a delay to the Brexit timetable if, as is widely expected, May loses the Brexit vote on Tuesday. The odds have shifted away from a Brexit by the end of March towards a Brexit by end of June. Such a request would be GBP positive as it would highlight to desire to avoid a "no deal" Brexit.

+ Swedish December CPI was slightly stronger than expected. EUR/SEK fell back from levels above 10.25 seen early on after the generally risk negative start to the day following the disappointing Chinese trade data overnight.
Eurozone industrial production was slightly weaker than expected at -1.7% m/m in November, but weak national data had prepared the market for weak numbers.

+ The USD was a little firmer through the morning, though gains were mostly a result of EUR/USD weakness that looks to have been mainly EUR/GBP driven. USD/JPY hovered in a narrow range just above 108 following risk related JPY strength in Asia.

Equities and bonds -

+ Firm start to the week for bonds, the China export data (& weak EZ IP) helping to keep risk pegged back and some yield grab still in force across the board. Bunds pushing back towards 165, +35-40 ticks. BTPs slightly underperform ahead of expected syndication, though DBRS kept rating unchanged, outlook stable.

US DATA

The US data calendar remains uncertain due to the government shutdown, though Labor Dep't and Fed releases will go ahead, as well as those from the private sector.

EMGE Europe

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

The ruble extended its losses at the beginning of Monday's session, with the USD/RUB temporarily rising to 67.285. The currency continued to suffer from expectations of the resumption of FX purchases by the CBR from Tuesday as well as lower oil prices in the aftermath of the softer-than-expected China's December trade data. Nevertheless, we see the ruble recovering in the next few sessions due to the seasonal increase in the current account surplus in January as well as the start of the monthly tax payment period on Tuesday that will probably lead to bigger FX sales by exporters, with the USD/RUB potentially breaching the key 66.55 support level.

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

The lira continued to weaken at the beginning of Monday's session, still underperforming other EMEA currencies with the USD/TRY temporarily rising to 5.5424. The currency was hurt by worse global sentiment in the aftermath of data showing contraction in China's imports and exports in December, aggravated by comments from U.S. President Donald Trump as well as November industrial production data. Trump said that the U.S. would "devastate Turkey economically" if the latter attack U.S.-backed Kurdish forces in Syria while data revealed that industrial production dropped for the third consecutive month in November, by 6.5% y/y after a 5.7% y/y fall in October, the weakest reading since September 2009 and worse than the consensus forecast of -5.4% y/y. We expect the lira to remain vulnerable in the next few days due to the CBRT's dovish statement as well as the threat of deterioration in relations with the U.S., with the USD/TRY potentially exceeding the key 5.6482 resistance level.


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