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


 12:34 (GMT) 14 Mar

  [Forex Highlights]

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RECAP CURRENCIES, DATA AND EVENTS

Regional Backdrop

Asian currencies were mired in a sea of red on Thursday. Data dump from China showed some mixed results. Disappointing industrial production figure likely intensified pressures to ramp up policy support for Chinese economy. Both onshore (-0.12%) and offshore yuan (-0.26%) weakened slightly against the dollar. Thai baht lost by 0.3% against the greenback, followed by KRW (-0.20%), SGD (-0.18%). Other currencies including PHP, IDR and INR were relatively stable.

News and FX

Asia:

+ China: February Industrial Production 5.3% y/y (Prev: 6.2); Retail Sales 8.2% y/y (Prev: 9.0); Fixed Asset Investment YTD 6.1% y/y (Prev: 5.9)

+ Indonesia: Indonesia Affirmed at 'BBB' by Fitch; Outlook Stable. ~ BBG

+ India: February WPI 2.93% y/y (Prev: 2.76).

+ USD/CNH: USD/CNH slid to a one-week low at 6.7005, following weakness in USD amid gains in sterling, after UK parliament rejected leaving EU without a deal. However, pair recovered all its losses on Thursday printing an intra-day high at 6.7227 at last look. Pair was lifted by China's weak industrial output and retail sales figures at 5/3% y/y (prev: 6.2) and 8.2% y/y (prev: 9.0) respectively in Feb. FAI picked up slightly to 6.1% y/y (prev: 5.9) in Feb. Pair is edging towards the strong resistance at 6.7250. PBoC fixed mid-point at 6.7009 vs. previous close of 6.7070. USD/CNY opened lower at 6.7010. However, it rose to an intra-day high at 6.7180, after the release of China's data mentioned above. 1Y NDFs was trading at 6.7473 at last look.

Europe News and FX

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

+ GBP/USD started the European session strong but peaked before 9 GMT and subsequently softened and was back to Tuesday close levels near 1.32 by the end of the session, pulling EUR/USD down with it. There was no real news on Brexit developments through the morning, but the chances of a third attempt at passing May's deal do seem to be quite high, and the chances of it passing seem significant, though probably not greater than 50%. The market is viewing the choices being restricted to either May's deal or a longer delay as mildly positive for GBP.

+ AUD and other higher yielders fell back in late morning on a Bloomberg report that the Trump-Xi meeting had been delayed until April, and USD/JPY also dipped though moves were quite modest.

+ Final German CPI was slightly weaker than expected in February at 1.5%, but in line with expectations on an HICP basis at 1.7%. French HICP revised up slightly to 1.6% y/y.

Bonds and equities

+ Brexit led gilt swings still dominate, GB10s +2.5bp having tested and held 1.25% again on the opening burst. Mkt juggling lots of balls on the possible options going forward. Periphery a touch tighter, BTPs recover from yesterday's supply related cheapening

US DATA

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

Today should report Jan new home sales at 590k versus 621k in Dec where we would not be surprised to see a revision. Also due are weekly jobless claims and Feb import prices.

EMGE Europe:

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

The lira depreciated at the start of Thursday's session, with the USD/TRY briefly rising to 5.4733. The currency suffered against the broadly stronger U.S. dollar and was not helped by data showing that industrial production fell for the fifth consecutive month in January, by 7.3% y/y as well as the European Parliament's call on the European Commission and EU governments late on Wednesday to suspend membership talks with Turkey because of the country's "democratic backsliding". We see potential for the lira's further depreciation in the near term due to concerns about premature monetary easing by the CBRT, with the USD/TRY possibly surpassing the key 5.4875 resistance level.

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

The rand continued to weaken at the beginning of Thursday's session, with the USD/ZAR temporarily rising to 14.47 after it surpassed the key 14.4545 resistance level. The currency was hurt by the U.S. dollar's broad-based appreciation, aggravated by Eskom's announcement that it would implement rotational power cuts. We think that the rand will stay under pressure in the near term because of power cuts, with the USD/ZAR potentially breaking the 14.50 resistance level.


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