Forex - Latam Summary & Highlights January 11.


 21:40 (GMT) 11 Jan

  [Forex Highlights]

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Latam Summary & Highlights January 11. (0101-HDRK-C01)

BRAZIL: BRL gains were muted this week with a 0.1% fain to 3.7135. There was a significant correction in the middle of the week when the currency tested below 3.70. While market optimism on reforms remain strong, the feeling is that the upside is limited at these levels. Di curve corrected upwards on the same reasons, limited upside; Jan 20 Di widened 11bp to 6.63% and Jan 21 Di was up 17bp to 7.44%. 5y CDS was 9bp down to 185. Ibovespa rallied 1.9% to 93,658. On Friday, Inflation in 2018 closed at 3.75%y/y, ending the year below the central target for the second year in a row. That said, the December number was above forecasts at 0.15%m/m with core indicators rebounding strongly, averaging 0.39%m/m, 3.14%y/y.

Latam Summary & Highlights January 11. (0101-HDRK-C02)

MEXICO: With the global market starting to price in a more dovish Fed, there was no focus on the domestic scenario and MXN had the freedom to rally, gaining 1.5% to close at 19.135. Locally the shortage of fuel and weaker than expected data was overlooked. Spread between 10y Mbono and 10y UST increased 14bp to 593. 1y IRS rate closed 3bp up to 8.62%. 5y CDS dropped 7bp to 139. Mexbolsa gained 2.8% to 43,572. On Friday, November industrial production came well below expectations at -1.3%m/m, -0.6%y/y. The downside surprise came from Mining (-2.3%m/m, -8.0%y/y), and construction (-1.9%m/m, -3.3%y/y. Manufacturing remains very soft at 1.0%m/m, +1.4%y/y, with the SA number recovering from previous month large drop (-2.5%m/m).

Latam Summary & Highlights January 11. (0101-HDRK-C03)

ARGENTINA: ARS gained 1.24% to close the week at 36.91, breaching the lower bound of the no intervention band amid improved global backdrop including more dovish Fed. The monetary policy rate accelerated its decline, closing the week at 58.10%. Bonar 24 increased by 3.65% to 98.5. 5y CDS dropped 58bp to 689. Merval gained 4.81% to 33,926.

Latam Summary & Highlights January 11. (0101-HDRK-C04)

CHILE: CLP closed the week 1.14% stronger to 674.58 supported by higher copper prices, weaker DXY and increased optimism on a U.S.-China trade agreement. 1y IRS was 5bp up to 3.19% mostly on the oil prices recovery. 5y CDS dropped 3bp to 54. IPSA gained 3.14% to 5,356.

COLOMBIA: COP rallied 1.8% in the week to close at 3,137.95, supported by a 7.9% rally in oil prices and 0.6% losses in global USD index. 1y IRS was 4bp down to 4.37%. 5y CDS decreased 9bp to 136. IGBC gained 2.1% to 11,621.

PERU: PEN closed the week slightly down, mostly on BCRP decision not to rollover maturing FX swaps. PEN closed at 3.375, a 0.1% loss in the week. 1y NDF was down 5bp to 4.17%. 5y CDS dropped 6bp to 85.


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