EM LATAM CREDIT: Central Bank Cuts Policy Rate 25bps to 9.25%: Neutral View

• RES 4: 1.4700 Round number resistance
• RES 3: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
• RES 2: 1.4452/4543 High Mar 13 / 4 and a bull trigger
• RES 1: 1.4402 High Mar 20 
• PRICE: 1.4325 @ 14:42 BST Mar 31
• SUP 1: 1.4235 Low Mar 26 and a key near-term support   
• SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
• SUP 3: 1.4011 Low Dec 5 ‘24
• SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle

USDCAD continues to trade through last week’s high. Moving average studies continue to highlight a dominant uptrend. A reversal higher would refocus attention on the bull trigger at 1.4543, the Mar 4 high. First resistance to watch is 1.4402, the Mar 20 high. A return lower and clearance of 1.4235, the Mar 26 low, would undermine the bull theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. 

Although the 7-year tail of 0.6bps was modest, it was the largest since last August. Primary dealer take-up rose to 12.7% from 8.8% in February. That drove a notable weakening in MNI’s RSI (which compares the latest auction’s results to the last five trade-through/tails and the last 10 dealer take-up percentages) to -2.64, its lowest since our records began in March 2021.

• The largest outright tail was seen in the 30-year line (1.1bps), but this compared to a 1.3bp tail in February. The 30-year RSI was essentially unchanged on the month at -1.08.
• The strongest auction in March was the 20-year, which saw a 1.4bp tail and a low 8.8% dealer take-up. This drove an RSI score of 1.69, which though, was still below January’s 1.78.

March's Treasury auctions brought the following results. Of the 7 nominal coupon auctions, three traded through and four tailed, with the 7-year sale standing out on the weak side according to MNI’s Relative Strength Indicator (RSI).

• 2Y Note trade-through: 3.984% vs. 3.985% WI.
• 2Y FRN: 0.105% high margin vs. 0.090% prior.
• 3Y Note tail: 3.908% vs. 3.902% WI.
• 5Y Note tail: 4.100% vs 4.095% WI.
• 7Y Note tail: 4.233% vs. 4.227% WI.
• 10Y Note trade-through: 4.310% vs. 4.314% WI.
• 10Y TIPS: 1.935% high yield vs 2.243% prior
• 20Y Bond trade-through: 4.632% vs 4.646% WI.
• 30Y Bond tail: 4.623% vs. 4.612 % WI.