MEXICO: Mexico City Foreign Direct Investment

• Crude prices have extended gains amid the escalation in geopolitical tensions following the shooting down of Russian drones over Poland.
• WTI spiked to an intraday high $64.08/b, before paring some of the move, after Trump sent a cryptic Truth Social post in response to the Russian drone incursion. Initial strength during the day was driven by earlier geopolitical tensions and risks of further sanctions/secondary tariffs on Russia, despite a large US crude inventory build.
• WTI OCT 25 is currently up by 1.7% at $63.7/bbl.
• Despite recent gains, the trend condition in WTI futures remains bearish. Initial resistance to watch is $66.03, the Sep 2 high. A stronger resumption of weakness would pave the way for a move towards $57.71, the May 30 low.
• Elsewhere, spot gold has risen by 0.6% to $3,648/oz, keeping the yellow metal close to yesterday’s all-time high at $3,674.3.
• Bullion has rallied ~10% since Aug 22 amid widespread expectations that the Fed will cut rates next week.
• Analysts at ANZ bank have raised their year-end gold forecast to $3,800 as they say rising risks to the labour market will likely prompt the Fed to maintain its easing stance through to March 2026.
• Gold remains in a clear bull cycle and last week’s gains plus this week’s bullish start reinforce current conditions. The next objective is $3,674.8, a Fibonacci projection, followed by $3,700 round number resistance.

A 25bp Fed rate cut at the September FOMC meeting looks assured regardless of what transpires in the August inflation data, given the increasing focus on downside labor market risks reinforced by this week’s QCEW revisions and PPI data, and another soft payrolls report for August last week.

• However the data has a chance to shape both the tone of the communications as well as the new set of quarterly forecasts due to be released at the meeting.
• Unexpected developments in tariff-sensitive core goods as well as in broader services will be in focus. Just before the pre-meeting blackout period, yet after nonfarm payrolls, Chicago Fed President Goolsbee (a 2025 FOMC voter) said that “The more mild numbers we get on inflation, the better I’ll feel about just focusing on the labor market… But in the last inflation reports, we also had this uptick in inflation coming from services, so I think we want to make sure that that’s more of a blip and not a more ominous indicator.”
• Goolsbee’s caution in the face of weaker jobs data suggests potential for broader caution on the FOMC should we see another solid set of prints this week, with other voters including Schmid and Musalem sounding very much unconvinced that significant easing is required at this juncture. That could tilt the balance away from the Dot Plot pointing to any more than the existing 2 cuts for the median voter by year-end, for instance.
• An unambiguously soft set of data, including a lack of major tariff passthrough to goods and limited bleeding through into services, could see FOMC participants more amenable to 3x cuts the rest of the year (the median is likely to be either 2 or 3 vs the current 2).
• Wednesday's pullback in PPI with downward revisions raises risks of support for a 50bp cut, and if CPI is very weak we would not be surprised to at see three dissenters in that column (Waller, Bowman, Miran).
• Otherwise, we would guess the FOMC median participant would be a little more cautious about near-term easing absent more conclusive evidence broad inflation pressures aren’t meaningfully bubbling up.
• It could also restrain Chair Powell’s conviction at the press conference on the need to reduce policy restriction in order to stave off apparent rising downside risks to the employment mandate.

• RES 4: 151.62 61.8% retracement of the Jan 10 - Apr 22 bear leg
• RES 3: 150.92 High Aug 1 and a key resistance 
• RES 2: 149.81 76.4% retracement of the Aug 1 - 14 bear leg 
• RES 1: 147.61/149.14 20-day EMA / High Sep 3  
• PRICE: 147.35 @ 16:31 BST Sep 10
• SUP 1: 146.21 Low Aug 14  
• SUP 2: 145.86 Low Jul 24
• SUP 3: 145.53 Trendline drawn from the Apr 22 low
• SUP 4: 145.40 50% retracement of the Apr - Aug upleg

USDJPY continues to trade inside a range. Attention is on key short-term support at 146.21, the Aug 14 low and a bear trigger. A break of this level would highlight a stronger bearish threat and highlight a range breakout. This would expose 145.40, a Fibonacci retracement. On the upside, clearance of 149.14, the Sep 3 high is required to reinstate a bullish theme. Moving average studies are in a bull-mode position, highlighting a dominant uptrend.