LATAM FX: Price Signal Summary - USDMXN Bear Flag
Jun-29 13:01
- USDMXN is consolidating. The downtrend remains intact and the current consolidation still appears to be a bear flag formation. If correct, this reinforces bearish conditions and note that moving average studies remain in a bear mode position. Scope is seen for a move towards 16.9791 and 16.7758, the 1.618 and 1.764 projections of the Jun 2 - Mar 9 - Mar 20 price swing. Resistance to watch is the 50-day EMA, which intersects at 17.5480. This is a key short-term hurdle for bulls, where a break would signal a reversal. The 20-day EMA intersects at $17.2581 and represents the first resistance.
- USDBRL remains in a downtrend and the latest recovery is considered corrective. The move lower on Jun 9 resulted in a break of 4.8859, the May 15 low and this confirmed a range breakout and a resumption of the downtrend. A continuation lower would open 4.7490, the Jun 6 2022 low and 4.6910, the May 30 2022 low. On the upside, initial firm resistance is at 4.9279, the 50-day EMA. A clear break would signal a potential reversal.
- USDCLP continues to trade in a range. The pair pierced (in mid-May) support at 783.10, the Mar 31 low. A clear break of this level would expose the key bear trigger at 776.28, the Feb 3 low. Clearance of this support would confirm a resumption of the broader downtrend. For now, the price remains above the May 15 low. A stronger bounce would refocus attention on key short-term resistance at 837.15, the Mar 17 high.
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STIR: Effective Fed Funds Rate
May-30 13:00
FRBNY EFFR for prior session:
- Daily Effective Fed Funds Rate: 5.08% volume: $136B
- Daily Overnight Bank Funding Rate: 5.07% volume: $286B
CANADA DATA: Current Account Deficit Clearly Smaller Than Expected In Q1
May-30 12:59
- The current account deficit was notably smaller than expected in Q1 at a seasonally adjusted C$6.1B (cons C$9.5B) after a downward revised C$8.1B (initial C$10.6B) in Q4.
- Prior revisions weren’t quite as favourable but left a trend improvement, with the current account deficit most recently peaking at 1.4% GDP in Q3, before narrowing to 1.2% GDP in Q4 and ~0.9% GDP in Q1 (vs 2-3% deficits pre-pandemic).
- The smaller deficit on the quarter came from smaller investment income outflows from -C$0.5B to -C$0.1B (with gains focused in direct investment and other income), whilst the goods & services balance saw a small deterioration from -0.3% to -0.5% GDP.
- Looking over a longer four-quarter rolling period though, the basic balance more sharply back from -1.7% GDP to -3.2% GDP, just exceeding the -3.1% GDP of Q3 for its largest deficit since 3Q19. It compares with the -3.9% averaged in 2019 or -4.9% through 2017-19.
- USDCAD has drifted almost 20 pips higher in the 30mins since the release despite the better than expected figures.
FRANCE T-BILL AUCTION RESULTS: 13/14/20/50-week BTFs
May-30 12:57
| Type | 13-week BTF | 14-week BTF | 20-week BTF | 50-week BTF |
| Maturity | Aug 30, 2023 | Sep 6, 2023 | Oct 18, 2023 | May 15, 2024 |
| Amount | E2.695bln | E399mln | E1.995bln | E1.795bln |
| Target | E2.3-2.7bln | E0-0.4bln | E1.6-2.0bln | E1.4-1.8bln |
| Previous | E2.692bln | E1.798bln | E2.098bln | |
| Avg yield | 3.202% | 3.147% | 3.274% | 3.359% |
| Previous | 3.115% | 3.234% | 3.324% | |
| Bid-to-cover | 2.6x | 6.89x | 2.8x | 2.81x |
| Previous | 2.29x | 2.72x | 2.72x | |
| Previous date | May 22, 2023 | May 22, 2023 | May 22, 2023 |
