MEXICO: USDMXN Trades in More Contained Range Ahead of Busy Week
Oct-25 10:41
- USDMXN has been respecting a contained 19.80/90 range since mid-session Thursday as more subdued sentiment across currency markets prevails ahead of the week’s close. The extremely busy global economic calendar next week will likely be keeping market participants on the sidelines for now, as the USD index takes a breather from its most recent lofty levels.
- US GDP and employment data next week are likely to drive the greenback price action, while US election probabilities will also continue to be closely monitored. Additionally, spillover effects to broader sentiment from the Japan election, the BOJ, the UK budget and month-end rebalancing should not be underestimated.
- On the domestic docket, trade balance data for September and the preliminary read of Q3 GDP will be highlights. Naturally, there will be continued attention paid to the trajectory for constitutional reforms in Mexico, and what impact this may have on the outlook for major ratings agencies.
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CHF: Softer JPY Drags CHF to Bottom of G10
Sep-25 10:34
- The firming greenback continues to work against the gains posted across both the JPY and CHF since the beginning of the week, with USD/JPY re-taking Y144.00 and USD/CHF testing the 0.8500 handle. Moves appear largely corrective at this stage, with very little feed-through in rates markets - the pricing for the SNB's Sept decision remains finely balanced between a 25 and a 50bp cut step (full MNI preview here: https://mni.marketnews.com/4edrH25 ).
- CHF/JPY drifts back to flat on the day on the move, erasing the ~70 pip gains posted in the cross through Asia-Pac trade. This fade off highs retains resistance at the 50-dma crossing today at 170.68. Technically, the formation of a death cross (50-dma < 200-dma) on Sep19 for the first time since February last year also signals near-term downside momentum for the price.
- USD/CHF remains in the Sept range, but progress above 0.85 would open more formative resistance at 0.8502, the downtrendline drawn off the July 16th high.
LOOK AHEAD: Wednesday Data Calendar: New Home Sales, 2Y FRN R/O & 5Y Note Sales
Sep-25 10:26
- US Data/Speaker Calendar (prior, estimate)
- Sep-25 0700 MBA Mortgage Applications (14.2%, --)
- Sep-25 1000 New Home Sales (739k, 700k)
- Sep-25 1000 New Home Sales MoM (10.6%, -5.3%)
- Sep-25 1130 US Tsy $28B 2Y FRN re-open, $62B 17W bill auctions
- Sep-25 1300 US Tsy $70B 5Y Note auction (91282CLN9)
- Sep-25 1600 Fed Gov Kugler moderated Q&A (text)
US 10YR FUTURE TECHS: (Z4) Corrective Cycle
Sep-25 10:23
- RES 4: 116-07 1.764 proj of the Aug 8 - 21 - Sep 3
- RES 3: 116-00 Round number resistance
- RES 2: 115-31 1.618 proj of the Aug 8 - 21 - Sep 3
- RES 1: 115-02+/23+ High Sep 19 / 11 and the bull trigger
- PRICE: 114-23+ @ 11:12 BST Sep 25
- SUP 1: 114-09+ Low Sep 24
- SUP 2: 114-00+ Low Sep 4
- SUP 3: 113-23 50-day EMA
- SUP 4: 113-12 Low Sep 3 and a key support
Treasuries maintain a bullish theme and the latest pullback appears to be a correction - for now. The contract has traded through the 20-day EMA, at 114-23+. A clear break of it would signal scope for a deeper retracement, potentially towards 113-23, the 50-day EMA. For bulls, a resumption of gains would refocus attention on 115-24+, the Sep 11 high and a bull trigger. A break would resume the uptrend.
