MEXICO: MXNJPY Approaching Strong Horizontal Support, Data Upcoming
Feb-20 16:31
- Despite a very contained session for USDMXN, the notable outperformance of the Japanese yen has seen MXNJPY (-0.96%) narrow the gap to a key support level at 7.29. Multiple tests of the level in late 2024 and on Feb 03 have built the significance of the level, and a breach in coming sessions could signal scope for a deeper medium-term selloff towards 6.99, the 2024 low.
- Renewed pressure on the MXN appears to be in relation to the confirmation of Banxico’s dovish tilt, and the ongoing US/Mexico trade talks in Washington igniting fresh tariff-related concerns.
- CIBC have said that interestingly, the recently appointed Deputy Governor Jose Gabriel Cuadra, although considering himself “neutral” stated that the market shouldn’t rule out a 50bps rate cut in March even if tariffs are implemented. CIBC have maintained their long USDMXN bias into the end of the quarter and suggest reloading USDMXN longs on dips below 20.30.
- For Japan, BoJ Governor Ueda stated he didn't discuss rising JGB yields with PM Ishiba at their regular meeting to discuss economic matters, with some analysts suggesting some comfort around the broader tightening BoJ backdrop, bolstering the Yen.
- Japan national CPI is on the docket for Friday’s APAC session, and Mexico will release its final reading of Q4 GDP and economic activity figures later in the session.
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EGBS: Natural Gas Rally Helping To Cap Upside In EGBs
Jan-21 16:19
The continued extension higher in natural gas prices will also be helping to cap rallies in EGBs, with TTF futures reaching E50/Mwh for the first time since Jan 3.
- Our commodities team notes that the rally is supported by high gas storage withdrawals and concern to low winter stocks, as the IEA forecast a tight market in 2025 despite rising LNG supply.
- Front month TTF has traded through the initial resistance levels with the short term bull trigger at the Jan. 2 high of €51/MWh.
- 1- and 2-year Euro inflation swaps have moved away from intraday lows through the afternoon, but remain 3-4bps lower today. The 5y5y inflation swap is 1.7bps lower today at 2.0863%, down from last Tuesday’s multi-week high of 2.1587%.
FED: US TSY 26W AUCTION: NON-COMP BIDS $2.075 BLN FROM $72.000 BLN TOTAL
Jan-21 16:15
- US TSY 26W AUCTION: NON-COMP BIDS $2.075 BLN FROM $72.000 BLN TOTAL
FED: US TSY 13W AUCTION: NON-COMP BIDS $2.415 BLN FROM $84.000 BLN TOTAL
Jan-21 16:15
- US TSY 13W AUCTION: NON-COMP BIDS $2.415 BLN FROM $84.000 BLN TOTAL
