LATAM FX: Price Signal Summary - USDCLP Downtrend Remains Intact
May-15 13:18
- USDMXN is trading closer to its recent lows following the pullback from 17.3885, the Apr 25 high. Price is once again below the 20- and 50-day EMAs. A continuation lower would pave the way for a move towards the 16.50 handle and 16.2616, the Apr 9 low and a key support. For bulls, resistance at 17.3860, the Jan 17 high, has recently been tested. This level is an important reversal trigger and a clear break, if seen, would be bullish and signal scope for a climb towards 17.6365, the 61.8% retracement of the Oct 6 - Apr 9 bear leg.
- The recent move lower in USDBRL appears to have been a correction. However, support around the 50-day EMA, at 5.0805, has also recently been pierced. A clear breach of this average would strengthen a short-term bearish theme and signal scope for a deeper retracement - this would open 4.9984, the Apr 10 low. Key short-term resistance has been defined at 5.1969, the Apr 30 high. Clearance of this hurdle would be bullish.
- The current bear cycle in USDCLP remains in play and the pair is trading lower today. The recent break of support at 935.63, the Mar 15 low, marked an important technical break and highlighted a stronger reversal. Sights are on 906.78 and 886.96, the 61.8% and 76.4% retracement of the Dec 1 ‘23 - Feb 26 bull leg. Initial key short-term resistance has been defined at 940.89, the 20-day EMA.
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FOREX: Retail Sales Reaction Reverses, Excepting USD/JPY
Apr-15 13:17
- Initial US retail sales react now fully reversed, with EUR/USD, GBP/USD and others back at pre-data levels - the exception here is USD/JPY, which holds ~30 pips of gains having printed another cycle best at 154.41. Rates markets are proving stickier, with the US 10y yield holding above 4.61% at typing.
- Strong volumes evident across currency markets both ahead of, and in response to, the data - with JPY futures printing cumulative volumes ~15% ahead of average for this time of day. Next notable resistance at 154.56, the 1.618 proj of the Feb 1 - 13 - Mar 8 price swing.
- Price action in EUR futures sees decent buying interest at 1400BST with spot at ~1.0645, helping close the data gap.
- ECB's de Cos still to speak later today, but he's highly expected to stick to the GC line for a June rate cut (he said earlier this month this was his "central scenario").
PIPELINE: JPM, Wells Fargo Debt Issuance on Tap
Apr-15 13:14
JP Morgan and Wells Fargo to issue debt today after reporting earnings last Friday.
- Date $MM Issuer (Priced *, Launch #)
- 4/15 $Benchmark JP Morgan 4NC3 +105a, 4NC3 SOFR, 6NC5 +120a, 11NC10 +140a
- 4/15 $Benchmark Wells Fargo 4NC3 +120a, 4NC3 SOFR
- 4/15 $Benchmark Eversource Energy 7Y +140a, 10Y +150a
- 4/15 $Benchmark EIB 5Y SOFR+38a
- 4/15 $Benchmark MuniFin 3Y SOFR+33a
- 4/15 $Benchmark JFM 5Y SOFR+69a
- Expected Tuesday
- 4/16 $Benchmark Province of Ontario 10Y
CANADA: New Recent Lows For Can-US Yield Differentials
Apr-15 13:09
- Strong US retail sales and disappointing Canadian mfg/wholesale sales data has pushed Can-US yield differentials to new recent lows ahead of both CAD CPI and the Budget tomorrow.
- Differentials: 2Y -73.5bps, 5Y -88bps and 10Y -88bps (all down 1-1.5bps since the data).
- Little change in near-term rate expectations though, June still showing 13-14bps of cumulative cuts, buoyed by Wednesday’s US CPI strength.
Data recap [see data bullet 0848ET for more detail]:
- Manufacturing sales: 0.7 (flash estimate +0.7%) after a downward revised 0.0 (initial +0.2%)
- Wholesale sales ex petroleum etc: 0.0% (flash estimate +0.8%) after a downward revised -0.2% (initial +0.1%).
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