EM LATAM CREDIT: Colombia Market Update

• US Data/Speaker Calendar (prior, estimate)
• 10/22 0700 MBA Mortgage Applications (-1.8%, --)
• 10/22 1130 US Tsy 17W bill auction 
• 10/22 1300 US Tsy $13B 20Y Note re-open (91210UN6)
• Source: Bloomberg Finance L.P. / MNI

Bloomberg News reporting that, “European nations are working with Ukraine on a 12-point proposal to end Russia’s war along current battle lines, pushing back against Vladimir Putin’s renewed demands to the US for Kyiv to surrender territory in return for a peace deal.” According to Bloomberg sources, “A peace board chaired by US President Donald Trump would oversee implementation of the proposed plan…” Seemingly a reference to Trump's “Board of Peace” for Gaza.

• The plan stipulates that, “both sides commit to halting territorial advances, the ... return of all deported children to Ukraine and exchanges of prisoners. Ukraine would receive security guarantees, funds to repair war damage and a pathway to rapidly join the European Union. Sanctions on Russia would gradually be lifted though some $300 billion in frozen central bank reserves would only be returned once Moscow agrees to contribute toward Ukraine’s post-war reconstruction.”
• The plan comes ahead of a tentatively scheduled second in-person summit between Trump and Russian President Vladimir Putin in Budapest, Hungary. Likely to take place after Trump returns from the APEC summit in early November, where he is expected to meet with Chinese President Xi Jinping.
• There may be limited optimism in European capitals that such a plan can gain traction with Putin or Trump without including Russian demands for territorial exchanges, regime change, and assurances on Kyiv's NATO aspirations.
• However, the template may be based on the recent US-brokered Gaza peace plan, which managed to achieve a ceasefire between Israel and Hamas without a detailed plan for the next phases of the peace plan.
• Notably, the plan, as reported by Bloomberg, primarily focuses on freezing the war along the current front lines before beginning negotiations towards a broader peace deal. It doesn't refrains from referencing territorial exchanges and only mentions Ukraine's EU membership.

• Tuesday’s session was categorised by a sharp selloff for precious metals, with the significant 6% unwind for spot gold providing a bid for the greenback against G10 peers. As such, the USD index has risen 0.3% on the session, to extend the bounce from Friday’s lows to just shy of 1%.
• The Japanese yen has been hardest hit in the G10 space, as markets focussed on Japan’s parliament confirming Sanae Takaichi as the new PM, and details emerged surrounding her new cabinet and her imminent plans to compile a new stimulus package. Furthermore, with Satsuki Katayama taking the finance minister role, expectations for a fiscal phase prioritising an Abenomics-like policy set have been reinforced.
• USDJPY rose from overnight lows of 150.47 to reach a session high of 152.17, with the recovery from last Friday’s low in USDJPY is beginning to highlight a stronger bullish signal. The pair fell from its best levels as PM Takaichi said there is "no immediate plan to revise the gov't-BoJ joint agreement on economic policy.
• Elsewhere, the Canadian dollar has outperformed following an above expectation set of inflation data. For USDCAD, the move lower narrows the gap to initial support at the 20-day EMA, which lies at 1.3972. However, it is worth highlighting that moving average studies are in a bull-mode position, highlighting a dominant uptrend.
• Initial weakness for EURCHF saw the cross trade within 4 pips of significant medium-term support at 0.9206. A break of this level would place EURCHF at the lowest level since the peg removal in 2015, and may garner attention as the inaugural SNB minutes are released this Thursday.
• In emerging markets, the dollar/gold dynamic has weighed significantly on the South African Rand, standing out among the EM FX basket. Despite the 1% USDZAR rally, spot remains shy of last Thursday’s highs, located at 17.4857, while bearish trend conditions do remain intact overall. A clear break of the 50-day EMA (at 17.44) would signal a potential reversal and open 17.8190, the Sep 4 high.