MEXICO: Boosted Sentiment Underpinning Peso Resilience
May-08 10:45
- USDMXN trades a touch lower at 19.5750 on Thursday, as the broad dollar strength is offset by boosted risk appetite associated with the announcement of an imminent US trade deal with the UK. Overall, the pair continues to operate within the newly established range between 19.50-19.75 and key downside levels include 19.2429 (Oct 14 low) and 19.0666 (Sep 18 low).
- April CPI data are due today at 1300BST(0800ET), with the headline rate seen ticking up to 3.9% y/y and core inflation rebounding to 3.92%, from 3.64%. Despite this, mounting growth concerns are still seen keeping Banxico on course to deliver another 50bp rate cut next week.
- BBVA pointed out that despite these upticks, inflation is set to fall sharply during the summer and end the year below 4% in a context of slowing economic activity.
- There were comments from both Banxico Governor Rodriguez and Deputy Governor Heath on Wednesday, who envision that further interest cuts are anticipated should inflation remain stable. Rodriguez reiterated that a weakened US economy could negatively impact the domestic outlook, and that given the uncertain environment, Mexico’s productive activity could remain sluggish through 2025.
- Heath did state the inflation risk balance is still biased to the upside, and said decisions in H2 will need a little more caution.
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OUTLOOK: Price Signal Summary - Bear Cycle In Oil Remains Intact
Apr-08 10:41
- On the commodity front, the trend condition in Gold remains bullish and the latest pull back appears corrective. Moving average studies are in a bull-mode position highlighting a dominant uptrend and positive market sentiment. Price has traded through the 20-day EMA. The next key support to watch lies at 2945.3, the 50-day EMA. A resumption of gains would refocus attention on $3196.2, a 3.236 projection of the Nov 14 - Dec 12 - 19 price swing. The bull trigger is 3167.8, the Apr 3 high.
- In the oil space, a bearish theme in WTI futures remains intact following the recent impulsive sell-off. The move down has resulted in the breach of a number of important support levels. The break reinforces a bearish threat and, despite the trend being in oversold territory, signals scope for a continuation of the bear leg. Sights are on $57.79 next, a 2.236 proectionj of the Jan 15 - Feb 4 - 11 price swing. Initial resistance is seen at $64.85, the Mar 5 low and a recent breakout level.
OUTLOOK: Price Signal Summary - Monitoring Support In GBPUSD
Apr-08 10:29
- In FX, EURUSD has pulled back from its latest high. For now, the trend condition remains bullish and a move down is considered corrective. A key resistance at 1.0955, the Mar 18 high, was breached last week, confirming a resumption of the uptrend. It paves the way for a climb towards 1.1188 next, a 0.764 projection of the Feb 28 - Mar 18 - 27 price swing. MA studies are in a bull-mode position highlighting a dominant uptrend. Initial firm support to watch lies at 1.0833, the 20-day EMA.
- GBPUSD traded sharply lower Monday, extending the retracement from the Apr 3 high. For now, the sell-off appears corrective. Price has traded below the 50-day EMA - a concern for bulls - however, MA studies are in a bull mode position and this highlights a dominant uptrend. A recovery would open 1.2899 and 1.3017, the 38.2% and 61.8% retracement of the Apr 3 - 7 sell-off . A move through Monday's 1.2709 low, would instead signal scope for a deeper retracement. This would open 1.2654 50.0% retracement of the Jan 13 - Apr 3 bull cycle.
- USDJPY maintains a bearish tone following last week’s sharp sell-off and the latest recovery is - for now - considered corrective. A resumption of the downtrend and a break of last Friday’s 144.56 low would signal scope for an extension towards 144.13, the 76.4% retracement of the Sep 16 ‘24 - Jan 10 bull leg. Initial firm resistance to watch is 149.00, the 20-day EMA. Resistance at the 50-day EMA, is at 150.33.
LOOK AHEAD: Tuesday Data Calendar: SF Fed Daly Outlook, Tsy 3Y Note Auction
Apr-08 10:25
- US Data/Speaker Calendar (prior, estimate)
- 08-Apr 0600 NFIB Small Business Optimism -- reported 97.4 vs. 100.7 prior
- 08-Apr 1130 US Tsy $70B 6W Bill auction
- 08-Apr 1300 US Tsy $58B 3Y Note auction (91282CMW8)
- 08-Apr 1400 SF Fed Daly economic outlook
