LATAM FX: Price Signal Summary: USDBRL Remains Soft
May-31 12:58
- USDMXN maintains a bearish tone and traded lower Monday. The pair has pushed through key support at 19.7274, the Apr 4 low. A clear breach highlights an important technical break and confirms a resumption of a bear cycle that started on Nov 26 last year. This opens 19.1560, the Mar 3 2020 low. On the upside, clearance of 20.6378, Apr 28 high, is still required to reinstate a bullish theme. Initial resistance is at 20.1083, the 50-day EMA.
- USDBRL remains soft and is trading near recent lows. Price has recently breached support at 4.8597, the Apr 29 low. This, together with a clear break of the 4.80 handle strengthens the current bearish cycle and signals scope for 4.5836, Apr 5 low and a key support. Key resistance has been defined at 5.2090, May 12 high. Initial resistance is at 4.9327, the 50-day EMA.
- USDCLP has recovered from its recent low, but remains vulnerable short-term. Price has recently traded below both the 20- and 50-day EMAs, signalling scope for an extension lower. This opens the 809.98 retracement, 61.8% of the Mar 29 - May 12 upleg. The current pullback is still considered corrective. The key resistance is at 871.60, May 12 high where a break would resume the uptrend. Initial resistance is at 838.82, the 20-day EMA.
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USDCAD TECHS: Corrective Pullback
Apr-29 20:00
- RES 4: 1.2964 High Dec 20 2021
- RES 3: 1.2936 2.0% 10-dma envelope
- RES 2: 1.2901 High Mar 8
- RES 1: 1.2880 High Apr 28
- PRICE: 1.2804 @ 16:59 BST Apr 29
- SUP 1: 1.2648 50-day EMA
- SUP 2: 1.2568 Low Apr 22
- SUP 3: 1.2459 Low Apr 21
- SUP 4: 1.2403 Low Apr 5 and a key support
USDCAD remains bullish and added to the week’s gains Thursday. However, the pullback from 1.2880, Thursday’s high, highlights potential for a short-term correction. A key near-term support lies at 1.2648, the 50-day EMA. A clear break of this support is required to suggest scope for a deeper pullback. For bulls, a resumption of gains would refocus attention on 1.2901, the Mar 8 high. This is also the bull trigger.
US TSY FUTURES: BLOCK, Late 10Y Buy
Apr-29 19:57
- +7,500 TYM2 119-00.5, buy through 119-00 pst-time offer at 1551:35ET
US TSYS: Data-Driven Vol, Yields Higher, Stocks Extend Wk Lows
Apr-29 19:54
FI markets traded weaker after the bell, off early session lows amid data-driven vol in the first half. Quiet second half trade ensued even as equities fell back to late Tuesday levels (SPX -3.6% to 4128.0)
- Rates trade weaker, curves bear flattening with short end underperforming (Block sale: -10,000 TUM2 105-10.88, sell through 105-11 post-time bid at 0841:030ET) after Personal Income: +0.5%/MoM vs. +0.4% est, Spending +1.1%MoM vs. +0.6% est, PCE Deflator in line at +0.9%, Employment Cost Index is +1.4% vs. 1.1% est.
- FI levels rebounded sharply after April Chicago Business Barometer™ fell to 56.4 vs. 62.0 est. Prices Paid ticked up a modest 0.4 points to 86.1 with over three-quarters of firms citing higher prices this month. The Ukraine war was cited as inflating steel, plastics and lumber costs.
- Data driven volatility evaporated by midday with rates hold to a relative narrow range, yield curves flatter but off lows (2s10s -1.116 at 18.994 vs. 13.399L; 5s30 -1.867 at -3.742 vs. -6.508L).
- Focus turns to next Wednesday's FOMC policy annc, 50bp expected, Tsy refunding early Wednesday as well.
- The 2-Yr yield is up 7.7bps at 2.6943%, 5-Yr is up 7.3bps at 2.9124%, 10-Yr is up 5.9bps at 2.8811%, and 30-Yr is up 4.9bps at 2.9413%.
