CHILE: CPI Data Keep Door Open To Resumption Of BCCh Easing Cycle This Month
Jun-06 17:01
- The tick down in headline inflation in May brought the annual rate to its lowest level since last November, helped by a moderation in volatile energy inflation. Core inflation ticked up 10bp to 3.6% y/y, however, albeit with core goods and core services inflation steady at 2.7% y/y and 4.2%, respectively.
- Looking ahead, Itaú expects consumer prices to fall by 0.1-0.2% m/m in June before rebounding by 0.6% in July amid an increase in electricity prices. Annual inflation should then fall more quickly in H2 given helpful base effects, reaching 4.0% or lower at year-end.
- Itaú expects the BCCh to resume rate cuts in September, but risks tilt towards a sooner start, possibly this month, amid a faster than expected decline in core inflation. Indeed, Santander sees the BCCh resuming rate cuts on June 17, supported by the publication of the new IPoM, which will allow the Board to better communicate its strategy.
- Against this backdrop, and amid a pullback in copper, the Chilean peso has traded marginally softer today, albeit within its recent range. A bear threat for USDCLP remains present, after hitting a two-month low yesterday, with scope still seen for a retracement towards 914.00, the Mar 18 low.
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STIR: Mar'26 SOFR Straddle Scale Seller Ahead FOMC
May-07 17:01
- over 14,000 SFRH6 96.62 straddles sold on day from 80-79 ref 96.655
EURUSD TECHS: Remains Above Support At The 20-Day EMA
May-07 17:00
- RES 4: 1.1696 1.618 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 3: 1.1625 1.500 proj of the Feb 28 - Mar 18 - 27 price swing
- RES 2: 1.1608 High Nov 9 2021
- RES 1: 1.1440/1573 High Apr 23 / 21 and the bull trigger
- PRICE: 1.1350 @ 16:33 BST May 7
- SUP 1: 1.1279 20-day EMA and a key support
- SUP 2: 1.1144 High Apr 3
- SUP 3: 1.1047 50-day EMA and a pivot level
- SUP 4: 1.0805 Low Apr 3
EURUSD is trading closer to its recent lows. The latest pullback appears corrective. The trend remains bullish - MA studies are in a bull-mode position signalling a dominant uptrend. The latest move down has also allowed an overbought condition to unwind. A resumption of gains would open 1.1608, the Nov 9 2021 high. Initial key support to watch is the 20-day EMA, at 1.1279. A break of this average would signal scope for a deeper retracement.
STIR: Just 7.5bp Of Cuts Priced For June FOMC Prior Today's Decision
May-07 16:47
- Fed Funds implied rates are at the high end of the week’s range for the next few meetings heading towards today’s FOMC decision, whilst meetings nearer year-end are more within range.
- We don’t anticipate any meaningful changes in the statement, though any signal that the Fed is looking seriously at “soft” survey data to assess the outlook could be significant. MNI Fed Preview here.
- Cumulative cuts from 4.33% effective: 0.5bp for today, 7.5bp Jun, 23bp Jul, 42bp Sep and 77bp Dec.
- The 42bp of cuts priced with the Sept meeting is close to pricing for July prior to Thursday’s ISM manufacturing report, to highlight the recent hawkish re-adjustment.
- SOFR futures point to an implied terminal yield of 3.15%, where it was at the NY crossover first thing. It has nudged out to SFRZ6 after months in the U6 (although recently with a few days with both U6 and Z6 yields equal). It’s technically the furthest out for the terminal since fleetingly on Feb 26 and before that mid-Dec prior to the Fed’s hawkish pivot.
