EM LATAM CREDIT: Colombia Tax Bill Debate

• Initial price action on Wednesday was once again constructive for the dollar, allowing the DXY to extend its rally this week. However, this sentiment steadily reversed across US hours, with the index slipping into negative territory approaching the APAC crossover. Currency market drivers have been few and far between, with most pointing to some short-term positioning squaring as we approach the US CPI report on Friday.
• Late source reports that the US is considering curbs on exports to China made with US software negatively impacted risk sentiment for a brief time, with equity prices sharply plumbing new lows, however there was little lasting impact on currencies.
• GBP was in the spotlight early, following a softer-than-expected CPI report that subsequently weighed firmly on sterling. GBPUSD fell from around 1.3380 down to 1.3306, strengthening the narrative that the recent recovery in the pair appears corrective. Key support and the bear trigger lies at 1.3249, the Oct 14 low. A break of it would resume the recent bear leg.
• Elsewhere, the Canadian dollar modestly outperforms in G10, helping USDCAD slide back below the 1.40 mark. Spot traded down to initial support at the 20-day EMA, intersecting at 1.3976. A close below the average will be monitored in coming sessions, with Canadian retail sales data due tomorrow.
• Risk in EURSEK remains tilted to the downside, with spot hovering just above support at 10.9036, the Sep 15 low. Clearance of this level would expose the April 4 low at 10.7941. Spot is on track for a sixth consecutive close lower, currently -0.10% today.
• Ahead of tomorrow's inaugural SNB meeting minutes, EURCHF consolidates yesterday's bounce from key clustered support between 0.9206/21. Tomorrow's minutes will signal how far the SNB was away from cutting into negative territory in September, and we specifically look for any indication of whether Schlegel's decision not to mention of negative side effects of NIRP was a deliberate move.

Mixed SOFR option trade in the second half. Underlying Tsy futures modestly higher (TYZ5 113-26 +2) while SOFR futures trade mixed. Projected rate cut pricing at/near steady vs. late Tuesday levels (*): Oct'25 at -24.7bp (-24.2bp), Dec'25 at -49.1bp (-49.2bp), Jan'26 at -64.2bp (-64.2bp), Mar'26 at -78.2bp (-78.2bp).

• +4,000 SFRZ5 96.12/96.25 put spds, 2.0 ref 96.375
• +5,000 SFRZ5 95.87/96.00/96.06/96.12 broken put condors, cab
• +5,000 2QX5 97.06/97.25 call spds, 4.0 ref 96.99
• +5,000 SFRH7 97.50/98.00 call spds, 11 ref 97.095
• -5,000 SFRH6 96.50/0QM6 96.62 put strip, 20.0
• +5,000 0QZ5 96.87/97.00 put spds 1.25 over SFRZ5 96.31 put
• +6,000 SFRZ5 96.18/96.25/96.31/96.37 call condors, 1.75

RRP usage recedes to $4.005B with 8 counterparties this afternoon from $4.699B Tuesday. Compares to $3,516B on Tuesday, Oct 13 (lowest level since early April 2021) & this year's high usage of $460.731B on June 30.