MEXICO: MXNJPY Extends Impressive 2025 Advance, BRLMXN Consolidating Break Lower
Dec-19 13:58
- While the dominant driver has been the significant weakening of the Japanese yen following the earlier BOJ decision, it is worth highlighting that MXNJPY is up over 1% on today’s session, extending the impressive rally from the April lows to 27.5%. The peso was little impacted by Banxico’s decision to cut rates and maintain its dovish bias, with USDMXN holding firmly below its recent breakout point, close to the 18.00 mark.
- For MXNJPY, spot continues to erode the aggressive selloff linked to the global carry unwind in 2024, with the cross gaining some additional upside momentum following the breach of 8.50, which has been a significant pivot point since 2023.
- Topside targets include 8.8391, the 76.4% retracement of the 2024-2025 range, and 9.0931, the July 2024 high.
- Elsewhere in the crosses, we have continued to flag the recent break lower for BRLMXN, which despite finding some support towards the Dec 2024 lows, looks set to consolidate its notable breach of 3.30 this week. This extends the selloff from the November highs to around 6.5%.
- BBVA have said that MXN seems to be capturing some of the outflows from Brazil and potentially from Colombia, with the continued addition of long positions. As such, peer performance could have an influence in the near term as BRL technicals and flows shift.
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GILTS: Medium-Term Steepening Risks Still Noted
Nov-19 13:54
The prospect for an expedited BoE easing cycle, the Chancellor’s apparent focus on hiking smaller taxes (where takings are more volatile than the “big 3”) and questions surrounding the leadership of the Labour Party point to ongoing steepening risks for the UK curve.
- This comes after questions surrounding the future of PM Starmer (any potential ousting could result in a meaningful change of fiscal policy alongside increased political risk premium) and Chancellor Reeves’ apparent u-turn when it comes to income tax rate hikes (along with suggestions that she is looking to shield small businesses from tax rises) have driven much of the steepening seen month-to-date.
- 2s10s trades at the highest level seen since early September, last 78bp. Next area of upside interest is located at the September year-to-date closing high (81.63bp).
- 5s30s is threatening a clean break above the September 19 closing high (142.55bp). A move through there would target the cycle closing high (151.97bp).
- The UK Budget (due next Wednesday) presents the key short-term risk event.
EURIBOR OPTIONS: Call Spread buyer
Nov-19 13:50
ERU6 98.31/98.43cs, bought for 2 in 10k.
US: MNI POLITICAL RISK - Trump Administration Readies New Ukraine Peeace Plan
Nov-19 13:34
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- President Donald Trump will deliver remarks to the US-Saudi investment forum at 12:00 ET 17:00 GMT.
- Trump designated Saudi Arabia as a major non-NATO ally, greenlit the sale of F-35 fighter planes, and struck deals on civilian nuclear energy, critical minerals, and technology with Saudi Crown Prince Mohammad bin Salman.
- Trump told reporters he thinks he already knows who he will nominate to replace Jerome Powell as the next chair of the Federal Reserve, appearing to rule out an unconventional selection.
- The US and Russia are reportedly working on a new plan to end the war in Ukraine. A high-ranking delegation of US military officials is expected to discuss the plan with Ukrainian President Volodymyr Zelenskyy in Kyiv today. Trump administration officials suggested to reporters that Kyiv may be forced to swallow an unfavourable ceasefire deal due to battlefield pressure and a domestic corruption scandal.
- The House of Representatives voted overwhelmingly 427-1 to force the Department of Justice to release files related to Jeffrey Epstein. The episode, along with several other recent displays of Republican dissent, has led some observers to question whether this is the beginning of Trump’s ‘lame duck’ period.
- Trump’s efforts to rewrite Congressional maps in red states to gain an edge in the 2026 midterm elections took a hit in Texas yesterday.
- Poll of the Day: A special election in Tennessee will provide a temperature check on the electorate ahead of the midterms.
Full Article: US DAILY BRIEF
