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


 10:29 (GMT) 24 Apr

  [Forex Highlights]

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RECAP CURRENCIES, DATA AND EVENTS

Regional Backdrop

Majority of the Asian currencies were in the red against the dollar on Wednesday, as dollar continued to strengthen. KRW was the biggest loser, down 0.77% against the dollar, as markets anticipated a sharp slip in Q1 GDP on Thursday. INR and PHP were down 0.45% and 0.34% against the greenback. They were followed by THB (-0.27%), IDR (-0.26%), SGD (-0.20%), MYR (-0.10%). CNY was the only winner, up 0.07% against the greenback. TWD, HKD, CNH and JPY were roughly stable.

News and FX

Asia:

+ China: China reinforces shift away from broad easing with targeted medium-term loans ~ BBG

+ India: Slackening Consumer Demand Reins in Animal Spirits in India ~ BBG

+ USD/CNH: USD/CNH slipped to an intra-day low at 6.7221 at the beginning of Wednesday from 6.7301. However, pair recovered slightly and traded around 6.7270. PBoC injected 267.4 billion yuan of targeted medium-term loans on Wednesday, a move that held back market easing expectations. PBoC fixed mid-point at 6.7205 vs. previous close of 6.7278. USD/CNY slipped from the 6.7278 MTD high and traded around 6.7200 on Wednesday. 1Y NDFs was trading at 6.7651 at last look.

Europe

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

+ The IFO survey was the main news in the European morning. All components fell in April from March and were also weaker than expected, with expectations having reflected some belief that the Brexit delay would support sentiment. While weaker than March, IFO was still above the year's low recorded in February. EUR/USD dipped below 1.12 on the news, but failed to sustain losses.

+ Despite the weaker than expected IFO, the riskier currencies managed modest outperformance though the morning as equities bounced from early losses. The JPY was a little weaker and the AUD a little stronger after the overnight losses.

+ GBP was little changed, ignoring the larger than expected public sector borrowing number reported for March.

Bonds and equities

+ Soft Australian CPI shifted expectations to a May RBA cut and helped core bonds firm at the open, also ahead of an expected dovish tone from the BoC. A miss on the IFO then helped bunds test last week's yield lows, while staying in the recent range. Steadier trade from BTPs though still underperforming the wider mkt. Gilts shrug off 19/20 issuance increase of GBP3.7bn after PSNB figures. UST stay firm out of Tue's solid 2yr auction and Eurodollar rate cut hedging demand.

US DATA

There is a modest weekly US data calendar, Fed officials will be quiet ahead of the May 1 rates decision.

EMGE FLOWS

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

The rand weakened to USD/ZAR 14.3725 as the dollar received a boost from strong U.S. new home sales, which came near to a one and a half year high in March, soothing concerns of a sharp U.S. slowdown. Furthermore, pressure on the rand was compounded by Q1 BER consumer confidence, which fell to 2 from 7 in Q4. As we had noted in our strategy, beyond global factors, concerns over the impact of load-shedding on growth and early market jitters over the May 8 general election suggest little scope for a recovery of the rand in the next few sessions, opening up USD/ZAR 14.41 resistance.

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

With a global backdrop characterised by a stronger dollar following strong U.S. home sales data, the lira has weakened to USD/TRY 5.8792, which was the weakest level since October 15 excluding the January flash crash. Yet domestic factors are also unsupportive and open up a test of USD/TRY 5.8875 resistance: the AKP is still pressuring the Supreme Election Council to assess whether 41,000 voters were ineligible to vote in the Istanbul election, which could still result in a re-run of the election. While the Board has rejected one of the claims of the AKP, it is under significant pressure. A re-run of the election would increase the scope for populist monetary policy easing. Furthermore, Turkey's purchase of S-400s from Russia is still likely to result in U.S. sanctions, given that Foreign Minister Cavusoglu denied that deploying them in Azerbaijan or Qatar have ever been an option, which would have helped soothe U.S. concerns


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