EM LATAM CREDIT: LATAM Credit Market Wrap

The American Institute of Architects (AIA)'s Architecture Billings Index (ABI) remained below the 50 mark in August.

• At 47.2, it improved from 46.2 in July. But the sub-50 reading meant that the value of new design contracts dropped for a record 18th consecutive month (the series has been published for 15 years).
• As a leading indicator of construction activity, this is a negative sign for both nonresidential and residential (multifamily) investment over the coming year.
• Already, construction is under duress - as of the latest data for August from the Census Bureau, private sector construction activity contracted (in value terms) for the 14th consecutive month (-0.2% after -0.5%). Overall, since peaking in December 2023, private nonresidential construction has fallen by 6.9%. 

• RES 4: 1.4019 38.2% retracement of the Feb 3 - Jun 16 bear leg 
• RES 3: 1.3968 High May 20 
• RES 2: 1.3925 High Aug 22 and the bull trigger
• RES 1: 1.3907 High Sep 24 
• PRICE: 1.3899 @ 21:11 BST Sep 24
• SUP 1: 1.3790/3727 50-day EMA / Low Aug 29 and a bear trigger  
• SUP 2: 1.3709 61.8% retracement of the Jul 23 - Aug 22 bull cycle
• SUP 3: 1.3658 76.4% retracement of the Jul 23 - Aug 22 bull cycle 
• SUP 4: 1.3637 Low Jul 25  

Wednesday’s rally in USDCAD undermines a recent bearish theme as the pair extends the recovery from the Sep 17 low. The pair has pierced resistance at 1.3890, the Sep 11 high. This exposes key resistance at 1.3925, the Aug 22 high and the bull trigger. Clearance of this hurdle would highlight an important short-term bullish break. Initial support to watch lies at 1.3790, the 50-day EMA.

• RES 3: 140.08 High Jun 13  
• RES 2: 139.05 High Aug 4 
• RES 1: 137.30 - High Sep 8 and key short-term resistance
• PRICE: 135.79 @ 20:49 BST Sep 24
• SUP 1: 135.76 - Low Sep 22 
• SUP 2: 135.39 - 1.618 proj of the Aug 4 - Sep 2 - Sep 8 price swing
• SUP 3: 134.69 - 2.000 proj of the Aug 4 - Sep 2 - Sep 8 price swing  

A bear threat in JGB futures remains present and the contract has pulled back from its recent highs. The latest sell-off has also resulted in a break of support at 136.19, the Sep 4 low and a bear trigger. Clearance of this level confirms a resumption of the downtrend and opens 135.39 next, a Fibonacci projection. Key short-term resistance has been defined at 137.30, the Sep 8 high.