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


 11:06 (GMT) 17 Jun

  [Forex Highlights]

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RECAP CURRENCIES, DATA AND EVENTS

Regional Backdrop:

A subdued start for most Asian currencies in a week loaded with key event risks. Markets turned focus to the June FOMC meeting, where the Fed policy path will be closely examined. THB led the losses among Asian peers, down by 0.45%. Philippines peso was in modest losses of 0.33% after overseas remittances missed estimates. That was followed by MYR (-0.27%), IDR (-0.12%), KRW (-0.11%). SGD was roughly stable CNY, TWD, HKD, INR, and CNH were pretty much unchanged.

Asia FX and News:

+ China: PBOC's 'Tremendous Room' to Act in Focus as Economy Decelerates ~ BBG

+ Indonesia: External debt increased from $387.88b in March, according to Bank Indonesia. ~ BBG

+ India: Asian Development Bank approved a project worth Rs 1,650 crore to develop infrastructure in Tripura. ~ ET

+ USD/CNH: USD/CNH is last seen choppy but remaining within range at 6.9334 last. Pair eagerly awaits outcome of Trump-Xi talks in G20 meetings over the weekend, and did not appear to be overly affected by soft China May data. Markets also seem to price in some more China authorities support on currency+economy. PBoC fixed mid-point at 6.8940 vs. previous close of 6.9258. This is despite a high closing rate on Friday. USD/CNY remained within Friday's range last at 6.9248. 1Y NDFs at 6.9928 last.

Europe FX and news

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

+ A very quiet and lethargic start, as the market adopts a waiting stance ahead of both the Fed later in the week and Draghi speech later today, kicking off the ECB symposium.

+ FX remains pretty much flat across the board over the European morning other than NZD that continues to inch out a modest corrective bounce

+ ECB's Coeure offers mixed comments. Says 'at the moment we are talking about contingency planning, but at some point in coming months we might well be facing a situation where risks have materialised'. Notes increased costs associated and so trade off gets more acute. Would have to consider tiering if cuts rates again. But also says economy not too bad, construction and services quite good

Bonds & Equities -

+ Very flat morning for bonds in general, although US short end sees a modest amount of correction in Asia following Fri's okay US data and ahead of Fed, US2s +2bp. EGBs largely treading water. Equities slightly up, banks take FT report of Deutsche 'bad bank plan' news okay. DB +1.7%, banks +0.7%.

US DATA

The data calendar is fairly light. Jun manufacturing surveys from the Empire State and Philly Fed are due today. Apr TICS capital flows are also due.

EMGE FLOWS

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

Most Russian government bond yields decreased by up to 5bps at the start of Monday's session and the ruble continued to strengthen, with the USD/RUB briefly falling to 64.28. Assets were driven by expectations of further monetary easing in the aftermath of the CBR's 25bp key rate cut last Friday as well as the beginning of the monthly tax payment period, with social tax remittances due to leave the system. In the next few days, we expect the ruble to remain supported by tax payments and elevated oil prices amid tensions in the Middle East, with the USD/RUB potentially falling below the key 64.14 support level.

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

The lira gained slightly at the start of Monday, outperforming other EMEA currencies on short covering after the losses it suffered in the previous several sessions with the USD/TRY briefly falling to 5.8615. But we think that the lira will resume depreciation in the next few sessions due to worries about U.S. sanctions in response to Turkey's acquisition of the Russian S-400 missile system as well as fears of further escalation in the U.S.-China trade war, with the USD/TRY potentially breaking above the 5.90 resistance level.


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