CHILE: CLP Outperforming After CPI Data Increase Risk Of Extended Rate Hold
Oct-08 13:15
- Today’s CPI inflation data confirmed that core pressures remain persistent, reinforcing the central bank’s recent caution. While higher food prices contributed to the increase in headline inflation, the BCCh’s preferred ex-volatiles measure also rose by 0.4% m/m, keeping the annual rate at 3.9% y/y, just below the target range ceiling.
- JP Morgan said that the data strengthen the case for the central bank to hold rates again at its Oct 28 meeting, while casting doubt on the likelihood of a 25bp cut in December. They note that base effects will be more favourable in Q1 2026, helping to bring headline inflation to 3% by February. However, these readings are likely to be transitory, and JPM sees December 2026 inflation at 3.6% y/y.
- Following these data, the Chilean peso is outperforming on Wednesday, with USDCLP falling by 1.0% to 950 in early trade. This brings the pair to the lowest level since Sep 23, narrowing the gap to next support around the 940 handle.
- With the central bank adopting a more cautious tone, attention turns to Friday’s BCCh economist survey which will include latest interest rate forecasts. The equivalent traders survey last week revealed that market participants expect a 25bp cut in December, followed by a final 25bp move to 4.25% in Q1 2026.
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OPTIONS: EUR Into Upper-end of Recent Range, Nearing Sizeable Strikes
Sep-08 13:14
EUR spot remains pinned between a series of sizeable strikes - over E3.7bln notional is set to roll-off between 1.1700 - 1.1750 today, which could help dictate the range. With US PPI, CPI data set for this week, the larger option pipeline is thinner than usual, but decent sized options expiring at 1.1740-50(E1.4bln) and $1.1825(E1.7bln) in EURUSD on Thursday could be of post-data interest.
Full expiry schedule for today's cut here:
- EUR/USD: $1.1600(E1.2bln), $1.1620-30(E1.0bln), $1.1690-00(E1.3bln), $1.1750(E1.2bln), $1.1835(E873mln)
- USD/JPY: Y146.00($1.1bln), Y146.45-55($945mln)
- USD/CAD: C$1.4000($517mln)
- USD/CNY: Cny6.9500($1.4bln)
SONIA OPTIONS: Z5 1x2 Put Spread Seller
Sep-08 13:11
SFIZ5 96.15/96.05 1x2 put spread, paper sells for 3.0 in 3k.
JAPAN: Takaichi Intends To Run For LDP Leader - Kyodo via BBG
Sep-08 13:08
"*JAPAN'S SANAE TAKAICHI INTENDS TO RUN FOR LDP LEADER: KYODO" Bloomberg
- Not a surprising development.
- Thatcherite MP Sanae Takaichi is a front-runner among many opinion polls - and also ran against Ishiba in the last leadership race. While politically conservative, she's made clear her preference for easy monetary policy and a bigger role for fiscal spending - reminiscent of the Abenomics policy set from 2012 - 2020.
- Takaichi's likely intent to run as LDP leader was a key driver of overnight twist steepening in the JGB curve.
