CHILE: CLP Holding onto Post-BCCh Gains, Scotiabank Unsure on Dec Cut
Oct-29 16:11
- The Chilean peso has pared gains, but continues to trade with a firmer footing on Wednesday, supported by the continued caution from the BCCh last night, as well as the further bounce in copper prices today. USDCLP is currently down by 0.3% around 941, just off earlier session lows near 938. Meanwhile camara swap rates are largely unchanged today following the widely expected rate decision. As noted earlier, a bear cycle in USDCLP remains intact, with sights on 922.67, the Jul 2 low and a key support. On the upside, key short-term resistance is seen at 955.38, the 50-day EMA.
- Although the BCCh continued to signal the likelihood of further gradual easing to neutral ahead, it is in no rush to deliver the next cut and will continue to assess the incoming data. While core inflation trends remain key, today’s labour market data support the central bank’s caution, with the unemployment rate ticking down to a seven-month low in September.
- Looking ahead, while several analysts still see scope for a rate cut in December (see our BCCh review sent out earlier here), risks are tilted to a later move and Scotiabank remains unconvinced about a December policy rate cut in the absence of a significant appreciation of the peso.
- In their view, the combination of stronger domestic momentum, a policy rate in the “neutral zone,” and inflationary risks linked to internal demand and labour costs limits the room for monetary policy adjustments without that FX adjustment.
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SECURITY: Trump Admin Will Proceed w/AUKUS Following Pentagon Review - Nikkei
Sep-29 16:06
Nikkei Asia reporting, “The Trump administration will proceed with the AUKUS defense pact linking the U.S., U.K. and Australia, maintaining the original timeline that includes the sale of three Virginia-class submarines to Canberra beginning in 2032...” The report comes after a Pentagon review in June, ordered by US Undersecretary of Defence Elbridge Colby, threw doubt over US participation in the nuclear submarine alliance.
- Senator Jeanne Shaheen (D-NH), the ranking Democrat on the Senate foreign relations committee, told the Financial Times in June that news of the administration backing away from Aukus would “be met with cheers in Beijing, which is already celebrating America’s global pullback… Scrapping this partnership would further tarnish America’s reputation and raise more questions among our closest defence partners about our reliability.”
- Australian defence think tanks have speculated that the AUKUS review may have been a strategic play by the Trump administration to pressure Canberra to increase defence spending. The Lowry Institute noted in July, “If the Pentagon’s review really is designed to leverage higher defence spending out of Australia, the PM will either have to perform a humiliating backdown or stand his ground…”
- Nikkei reports, “The review of pact will wrap up before Australian Prime Minister Anthony Albanese visits the White House on Oct. 20.”
US TSY FUTURES: BLOCK: Large Dec'25 5Y Sale
Sep-29 16:01
- -10,400 FVZ5 109-05.5, sell through 109-06 post time bid at 1137:54ET, DV01 $456,300.
- The 5Y contract trades 109-05.5 (4) last
TARIFFS: Switzerland Offers Gold Industry Investments As US Sweetener
Sep-29 15:54
Switzerland has "has offered to invest in the US gold-refining industry, as part of its efforts to persuade the Trump administration to lower the 39% import tariff imposed last month", Bloomberg reports. Note that is already the second headline crossing today on Swiss - US relations following this morning's re-commitment for non-manipulation of FX rates ('Switzerland - US Reconfirm Not Manipulating FX Rates' - MNI, Sep 29).
- "The proposal made to US Treasury Secretary Scott Bessent and Trade Representative Jamieson Greer would see Swiss refiners move their lowest-margin business to the US, according to people familiar with the talks. That includes melting down the gold bars traded in London and recasting them into the smaller bars favored in New York", Bloomberg adds.
- Switzerland previously made little to no apparent progress in further trade negotiations following the US's 39% tariff announcement on August 1. The Bloomberg article does not comment on the impact of the proposal on the negotiations. SECO (Swiss government ministry) downwardly revised their 2026 growth estimate from 1.2% to 0.8% as a function of the tariffs. The SNB meanwhile sees the tariff impact as "limited" on aggregate for the Swiss economy.
