PERU: MNI BCRP - Nov 2025: Hold Seen, Risk Of Dovish Tilt

• There is little reaction to Philly Fed’s Paulson debut speech since replacing Harker after his retirement in June.
• She revealed she was indeed one of the nine dots who look for two additional cuts this year following the 25bp cut last month (the median view), as we guessed, and she wouldn’t be drawn on her rate outlook for 2026 (“I think next year is a long way off right now”).
• US rates hold today’s steady move back towards Friday’s highs, ultimately fading Trump’s weekend comments that looked to downplay China tariff threats from Friday. That’s despite US equity futures holding close to session highs having pared some of Friday’s sharp losses.
• Fed Funds futures cumulative cuts from an assumed 4.10% effective: 24bp Oct, 47.5bp Dec, 59.5bp Jan, 72bp Mar, 79.5bp Apr and 93.5bp Jun.
• SOFR futures are unchanged on the day for the Z5 before an almost uniform increase of just 1 tick looking out to end 2027 contracts.
• The terminal yield of 2.98% (SFRH7) is 2.5bp lower since the NY crossover (ahead of a Columbus Day holiday-thinned session), pointing to between 112-115bp of cuts ahead depending on fixed rate assumptions (i.e. roughly 4.5 25bp cuts in total). It’s set for the lowest close since Sep 18, the day after the FOMC decision.  

• RES 4: 1.3789 High Jul 1 and key resistance    
• RES 3: 1.3726 High Sep 17 
• RES 2: 1.3661 High Sep 18
• RES 1: 1.3443/3527 20-day EMA / High Oct 1 and a pivot level 
• PRICE: 1.3325 @ 15:47 BST Oct 13
• SUP 1: 1.3262 Low Oct 10
• SUP 2: 1.3254 Low Aug 4
• SUP 3: 1.3142 Low Aug 1 and a key support
• SUP 4: 1.3041 Low Apr 14           

A short-term bear condition in GBPUSD remains intact and last week’s extension down has strengthened this condition. The pair has breached a key short-term support at 1.3333, the Sep 3 low. The break signals scope for a deeper retracement. A clear break of 1.3280 (pierced), a Fibonacci retracement, would open key support at 1.3142, the Aug 1 low. Initial resistance to watch is 1.3443, the 20-day EMA.            

New polling from Ipsos has suggested that the government shutdown might hurt Republicans and President Donald Trump more than it would hurt Democrats. However, "At the same time, there aren’t any glaring signs that it will help Democrats, who have been struggling with their own lack of popularity. Ultimately, while the fate of this shutdown is uncertain, one thing that seems likely is that this shutdown will only reinforce partisan entrenchment and disillusionment.”

• Ipsos notes, “A majority of Americans are at least somewhat concerned about the government shutdown, though it’s not very concerning to most… No side will leave this shutdown unscathed. Democrats in Congress, Republicans in Congress, and President Trump receive at least some blame in the eyes of the public.”
• Ipsos adds, “How hard do Americans want their side to fight? It depends. Half of America would prefer their leaders stand up for their issue positions at the cost of a shutdown. Independents would rather see a compromise. The most likely end result: more disillusionment.”

Figure 1: Who gets the blame for the government shutdown?

Source: Ipsos