MEXICO: Banxico Interest Rate Decision Due In One Hour
- A reminder that almost all analysts expect the central bank to deliver another 25bp cut of the overnight rate to 10.25% at 1900GMT(1400ET).
- Downside growth risks and the continued decline in core inflation suggests a continuation of the gradual easing cycle is most likely at this juncture.
- However, a hawkish surprise cannot be completely ruled out amid the significant MXN volatility in recent weeks.
- Our full preview with analyst views here.
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EURGBP TECHS: Monitoring Support
- RES 4: 0.8494 High Aug 26
- RES 3: 0.8464 High Sep 11 and key resistance
- RES 2: 0.8453 High Sep 18
- RES 1: 0.8434 High Oct 3
- PRICE: 0.8331 @ 16:45 BST Oct 15
- SUP 1: 0.8325/11 Low Oct 15 / Low Oct 1 and a key S/T support
- SUP 2: 0.8276 3.382 projection of the Aug 8 - 13 - 14 price swing
- SUP 3: 0.8250 Low Apr 14 ‘22
- SUP 4: 0.8203 Low Mar 7 2022 and a major support
EURGBP continues to trade within the Oct 3 range. The rally on this day highlights a possible reversal and note that the cross is trading close to the base of its 0.9300 - 0.8300 multi-year range and a key area of support. For now, MA studies are in a bear-mode position - highlighting a dominant downtrend. Key support is 0.8311, Oct 1 low. Key resistance is 0.8464, Sep 11 high and a reversal trigger. First resistance is at 0.8434, Oct 23 high.
US: Polling Miss Could Result In A Decisive Win For Trump Or Harris
The presidential race continues to get tighter, with former President Donald Trump and Vice President Kamala Harris effectively tied across all seven key swing states.
- Nate Cohen at the New York Times writes: “It’s hard to think of any election when so many critical states were so close in the polls at this stage,” noting that although the 2000 and 2004 elections were close, “There has never been an election with so many polls showing such a close race.”
- Cohen adds: “In such a close race, even the slightest movement in the polls takes on outsize significance. For that same reason, even a modest error in the polls could yield a very different result. Either candidate could win decisively.”
Figure 1: Swing State Polling Averages
Figure 2: Likely Results in the Event of a Polling Miss
Source: New York Times
US TSYS/OVERNIGHT REPO: Reverse Repo Takeup Below $300B For First Time In Month
ON Reverse Repo facility takeup fell to $286.4B today, vs $331.7B on Friday (the number of counterparties fell to 50 from 59 prior).
- This marks the first time since September 17 that ON RRP takeup has fallen below $300B - this had been anticipated due to higher coupon settlements (3-/10-30Y Tsy auctions) increasing demand for overnight financing.
- It's plausible ON RRP takeup will remain below $300B until month-end though is largely anticipated to remain at/above low September levels throughout (~$230B).
- Note that ON RRP is seen as something of a complement to broader bank reserves by the Fed, and its trajectory will be a factor in the determination of when to end QT. Added to reserves coming in at $3.2T last week, there is no urgency to reconsider balance sheet reduction at this stage.
