LATAM FX: Price Signal Summary - USDMXN Trend Needle Points South
Jul-26 13:04
- USDMXN conditions remain bearish and moving average studies continue to highlight a downward trend signal. Support at 16.9811, the Jul 5 low, has recently been cleared. The break confirmed a resumption of the primary downtrend and marks a continuation of the price sequence of lower lows and lower highs. The focus is on 16.4472, the 2.0 projection of the Jun 2 - Mar 9 - Mar 20 price swing. Resistance to watch is the 50-day EMA, which intersects at 17.2216. This is a key short-term hurdle for bulls, where a clear break would signal a reversal.
- USDBRL remains in a downtrend and this week’s move lower has confirmed a resumption of the medium-term bear cycle - support at 4.7513, the Jun 22 low, has been cleared. This opens 4.6910 next, the May 30 2022 low. Key resistance is at 4.8668, the 50-day EMA. Initial resistance is at 4.8093, the 20-day EMA.
- USDCLP maintains a short-term bullish tone following recent gains. The pair on Jul 11, traded through resistance at 815.47, the May 25 high. The clear break of this level signals scope for a climb towards 837.15, the Mar 17 high and a key resistance. Initial key support has been defined at 803.20, the Jul 20 low. A break of this l;evel would be a bearish development.
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STIR: ECB Pricing Little Changed On Day, Sintra & CPI Eyed
Jun-26 13:04
ECB-dated OIS is little changed across the strip today, with a 25bp hike at next month’s meeting ~90% priced and a terminal deposit rate of just below 4.00% currently seen.
- Weekend ECB speak saw Vice President de Guindos reiterate the idea that the Bank is moving into the final stretch of its tightening cycle, as he underscored the importance of underlying inflation movements and an awareness of the risk of second-round inflationary impulses.
- Elsewhere, Irish Central Bank Governor Makhlouf stuck with the centre of the ECB, noting that he is not sure what decisions will be taken beyond the Bank’s summer break, along with indicating the likelihood of another 25bp hike in July. Makhlouf told the Irish Independent “I do feel that we're near the top of the ladder. Some others may feel we're further down, but we'll see.”
- The ECB’s annual Sintra forum gets underway this evening. President Lagarde will open the event and the full schedule can be found here.
- Some sell-side desks have questioned the market-moving capability of the event given the stage in the global tightening cycles and the deluge of central bank speak released in recent times.
- Friday’s flash Eurozone CPI data presents the other major focal point for market participants this week.
| ECB Meeting | €STR ECB-Dated OIS (%) | Difference Vs. Current Effective €STR Rate (bp) |
| Jul-23 | 3.626 | +22.6 |
| Sep-23 | 3.799 | +39.9 |
| Oct-23 | 3.863 | +46.3 |
| Dec-23 | 3.884 | +48.4 |
| Jan-24 | 3.848 | +44.8 |
| Mar-24 | 3.791 | +39.1 |
| Apr-24 | 3.692 | +29.2 |
FRANCE T-BILL AUCTION RESULTS: 13/20/30/50-week BTFs
Jun-26 12:58
| Type | 13-week BTF | 20-week BTF | 30-week BTF | 50-week BTF |
| Maturity | Sep 27, 2023 | Nov 15, 2023 | Jan 24, 2024 | Jun 12, 2024 |
| Amount | E22.76bln | E1.795bln | E399mln | E1.496bln |
| Target | E2.4-2.8bln | E1.4-1.8bln | E0-0.4bln | E1.1-1.5bln |
| Previous | E2.698bln | E1.5bln | E475mln | E1.755bln |
| Avg yield | 3.431% | 3.532% | 3.551% | 3.623% |
| Previous | 3.387% | 3.499% | 3.485% | 3.605% |
| Bid-to-cover | 0.23x | 2.42x | 5x | 2.83x |
| Previous | 2.17x | 3.38x | 2.63x | 2.2x |
| Previous date | Jun 19, 2023 | Jun 19, 2023 | Jun 19, 2023 | Jun 19, 2023 |
BONDS: Bond and Rate futures stays underpinned
Jun-26 12:53
- This is the lowest traded volumes in TYU3 since at least the 22nd May, with desks on the sidelines.
- Upside in Govies and in Rate futures markets has so far been favoured as investors look for EU inflation to ease.
- The main initial resistance in Bund at 134.95 has held for now.
- TYU3 did test Friday's high, but has lacked traction, printed a 113.16+ high vs 113.15+ on Friday.
- The resistance in TYU3 is at 113.18.
