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


 10:59 (GMT) 12 Apr

  [Forex Highlights]

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RECAP CURRENCIES, DATA AND EVENTS

Regional Backdrop

The week saw Asian currencies with mixed performances against the dollar. Offshore yuan was slightly weaker by 0.20% against USD, while CNY was stable. MAS Keeps policy settings unchanged as growth slowed in Q1. This had muted impact on SGD. Elsewhere, PHP led the gains among Asian currencies, up by 0.63%. Ringgit was under pressure, down by 0.80% against USD. This was followed by KRW (-0.27%), TWD (-0.21%).

News and FX

Asia:

+ N.Z. March Manufacturing Index Falls 1.5 Pt M/m to 51.9

+ Powell Said to Tell Democrats Fed Won't Bend to Outside Pressure ~ BBG

+ Cain Expected to Withdraw Name from Fed Consideration ~ ABC

+ RBA Financial Stability Review: Household Risks have Risen

+ EUR broadly rose into Tokyo Fix, driven by bids on EUR/JPY. The cross broke through the 100dma, which likely triggered stops along the way, peaking at 126.24 intraday. USD/JPY also higher, but limited by April 5 high at 111.82. EUR/USD shot to just above this week's high around 1.1290. News on Cain's likely withdrawal from Fed candidacy withdraw wasn't a surprise to market given the lack of support from Republican seen on Thursday. AUD fell on RBA financial stability review, which highlighted household risks. Losses were recovered against a broadly softer USD, while AUD/NZD stuck to intraday lows.
+ USD/CNH: During the week, USD/CNH drifted higher even as it came off slightly on Friday. Pair was last at 6.7246 after reaching a high of 6.7304. China trade data released today was within expectations. Exports rebounded 14.2% y/y while imports fell 7.6%. The trade surplus rebounded to above-expectations. PBOC fixings remained within the 6.7088-6.7220, as USD/CNY remains within a narrow band with a small uptrend over the week. Pair last retracing a weekly high of 6.7232 to 6.7183.

Europe

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

+ The positive bias in EUR/JPY that started in Asia continued in Europe, with EUR/JPY advancing another 50 pips from the European open and EUR/USD breaking above 1.13 for the first time since early March. The EUR/JPY strength in Asia looks to have been triggered by an M&A flow rather than any real news, and the rise in Europe consequently looks to be more about positioning and momentum than a change in market perceptions. But the EUR may also have gained some support from a report suggesting that the ECB was unlikely to embrace tiering of interest rates to moderate the impact of negative rates on Bank profitability.

+ Strong Chinese money and credit data in March released at 0900 bst helped support risk appetite through the morning, after there was little reaction to the mixed Chinese trade numbers released at 0730. AUD/.USD rallied particularly hard on the news, while USD/JPY also got a further boost, but still failed to break above 112.

+ GBP underperformed the EUR and AUD with GBP/USD largely steady, and EUR/GBP traded up to 0.8658, its highest since March 22.

Bonds and equities

+ Core attempted a small bounce off support to consolidate early on. However, a very strong above-mkt bounce in China credit data continued to leave core longs offside, with US5s +2.5/3bp and DE10s testing clear of zero. On the future, bund break below 165.50/40 extends towards the 165.10- early Apr lows

US DATA

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

Today sees Empire State manufacturing data for Apr and late in the day Feb TICS capital flows. Voting Fed dove Evans is due to speak.

EMGE Europe:

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The lira extended its losses at the beginning of Friday's session, still underperforming other EMEA currencies with the USD/TRY temporarily rising to 5.8135 after it surpassed the 5.7715 resistance level. We expect the currency to continue to suffer from worries about the U.S. sanctions and uncertainty over the Istanbul election in the coming week, with the USD/TRY potentially exceeding the key 5.844 resistance level.

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

The ruble gained slightly at the beginning of Friday's session with the USD/RUB temporarily falling to 64.3725, supported by higher oil prices. We think that the currency will benefit from bigger FX sales by exporters in the coming week due to the start of the monthly tax payment period next Monday, with the USD/RUB possibly falling below the 64.20 support level.


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