LATAM FX: Price Signal Summary - USDCLP Support Remains Exposed
Nov-17 14:12
- USDMXN traded sharply lower Tuesday and the pair continues to weaken, extending the reversal from last 17.9394, the Nov 10 high. The move lower confirms the end of the recent Nov 3 - 10 corrective bounce and the break of support at 17.2833, the Nov 3 low, confirms a resumption of the current bear cycle and opens 16.9988, the Sep 20 low. On upside, a move above 17.9394 would be a short-term bullish development and expose 18.4863, the Oct 6 high.
- USDBRL maintains a softer tone. The pair traded lower yesterday and this resulted in a clear break of 4.8590 support, the Nov 7 low. The move lower confirms a resumption of the current downtrend and signals scope for an extension towards 4.8200, 76.4% of the Jul 28 - Oct 6 upleg, and the 4.8000 handle. Initial firm resistance is at 4.9535, the Nov 10 high.
- The USDCLP uptrend remains intact, however, this week’s sell-off does threaten the bullish theme. Key short-term support has been defined at 873.00, the Nov 3 low. A break of this level would strengthen a bearish threat and signal scope for a deeper retracement towards 837.45, the Aug 25 low. For bulls, clearance of 924.67, the Nov 13 high, would expose key resistance at 955.00, the Oct 16 high.
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STIR: Latest SFR Options
Oct-18 13:57
- SFRM4 94.37/95.75 RR, sold the call at half in 6k.
- 0QX3 95.25^ sold at 30.5 in 1k.
- 0QX3 95.50c, sold at 7 in 2.5k.
STIR: ECB-Dated OIS Little Changed Ahead Of Quiet Period
Oct-18 13:51
ECB-dated OIS is little changed, generally sitting with 1bp of yesterday's closing levels, holding to tight ranges this far.
- UK data, geopolitical angst and swings in core global FI markets haven’t provided much impetus given the ECB’s well-documented stance re: current policy settings.
- ECB hawk Holzmann has alluded to the risk of higher oil prices owing to the tension in the Middle East, warning of the feedthrough impact for inflation. Late on Tuesday he stressed that the Bank is not out of the woods re: inflation, while once again stressing that further shocks may result in additional rate hikes.
- Elsewhere, Greek central bank chief Stournaras told the FT that the Bank is “in the dark” as the Israel-Hamas war is creating new challenges from energy markets. He also underscored the importance of PEPP as the first line of defence for the bond market “given everything going on in the world.” Asked when he thought the ECB could start cutting rates, Stournaras suggested: “If inflation in the middle of next year . . . falls close to 3%, that is perhaps the time to start thinking about a rate cut.” These comments leave him on the dovish side of the ECB spectrum.
- We remain on the lookout for any unscheduled comments ahead of the ECB’s pre-meeting quiet period.
| ECB Meeting | €STR ECB-Dated OIS (%) | Difference Vs. Current Effective €STR Rate (bp) |
| Oct-23 | 3.905 | +0.1 |
| Dec-23 | 3.939 | +3.5 |
| Jan-24 | 3.937 | +3.3 |
| Mar-24 | 3.890 | -1.4 |
| Apr-24 | 3.823 | -8.1 |
| Jun-24 | 3.731 | -17.3 |
| Jul-24 | 3.635 | -26.9 |
| Sep-24 | 3.530 | -37.4 |
GILTS: Gilt and SONIA stays under pressure
Oct-18 13:49
- With Gilt and the Back Sonia strip still under pressure, in terms of pure technical, next immediate support in Gilt is at 91.90 Low Oct 6.
- The more interesting level is the 4.666% October high in Yield, highest since the end of August.
Reference 92.22:
- 4.666% = 91.77.
Chart source: MNI/Bloomberg
