LATAM: Summary – March 06
Mar-06 11:15
- A busier LatAm docket kicks off with Brazilian current account balance and FDI figures for January. Brazil then reports industrial production data, while Mexico consumer confidence and vehicle production data will also cross. Later in the session, Brazil’s monthly trade balance is expected, before Argentina industrial production. Ecuador CPI is also scheduled.
- There is no publicly known time for the publication of Chair Powell’s prepared remarks for his testimony before the House at 1000ET. However, there does appear to be a pattern of a text release at 0830ET when it comes to speaking to the House first before the Senate on Thursday, as is the case for this Congressional round.
- In G10, the focus for the remainder of the Wednesday session turns to the ADP employment change release and JOLTS Job Openings data for January - ahead of the Bank of Canada rate decision.
- Global News:
- US – Donald Trump won resounding primary victories in more than a dozen states Tuesday, pulling closer to securing the Republican presidential nomination and catapulting more fully into a rematch with President Biden. He won delegate-rich Texas and California, led handily in more moderate Massachusetts, and was winning by well over 60 points in Oklahoma with almost all of the vote counted there Tuesday night.
- JAPAN (MNI) – the BoJ could exit negative rates and end yield curve control at the March 18-19 meeting to avoid potentially weaker economic data due out in April that may threaten its ability to adjust easy policy settings, MNI understands. BOJ officials believe a wait-and-see attitude could risk economic data deteriorating and lessen the chance of an exit at the April 25-26 board session.
- CHINA (MNI Beijing) – major economies are expected to loosen monetary policy in 2024 and the USD will weaken, allowing the PBOC greater policy space, Pan Gongsheng, PBOC governor said at a press conference on Wednesday. China’s central bank had policy reserves and a “rich toolbox” in place to maintain a flexible approach to conditions this year, with policymakers looking to balance growth with risk management, Pan added.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
STIR: OI Points To Mix Of Short Setting & Long Cover In SOFR Futures Post-Payrolls
Feb-05 11:12
The combination of Friday's move lower across most of the SOFR futures strip and preliminary OI data point to the following positioning swings in the wake of the NFP release:
- Whites: Apparent long cover in SFRH4 through SFRU4. It is hard to be sure when it comes to SFRZ3 given its unchanged price status on the day.
- Reds: Apparent short setting in all contracts.
- Greens: Apparent short setting across all contracts outside of seeming net long cover in SFRH6. The former dominated in net pack OI terms.
- Blues: A mix of short setting (SFRH7 & M7) and long cover (SFRZ6 & U7), with the former providing the dominant impulse in terms of net pack OI.
- The reds came under the most pressure in price terms, with each contract shedding over 20bp come settlement.
- FOMC-dated OIS removed ~18bp of '24 rate cut pricing come the close (vs. pre-NFP levels). That move has extended further today in the wake of Fed Chair Powell's weekend remarks.
| 02-Feb-24 | 01-Feb-24 | Daily OI Change | Daily OI Change In Packs | ||
| SFRZ3 | 1,206,083 | 1,181,739 | +24,344 | Whites | -36,728 |
| SFRH4 | 1,153,865 | 1,159,383 | -5,518 | Reds | +33,740 |
| SFRM4 | 1,049,611 | 1,067,537 | -17,926 | Greens | +16,537 |
| SFRU4 | 904,430 | 942,058 | -37,628 | Blues | +1,276 |
| SFRZ4 | 1,057,933 | 1,053,927 | +4,006 | ||
| SFRH5 | 593,354 | 573,321 | +20,033 | ||
| SFRM5 | 661,577 | 652,708 | +8,869 | ||
| SFRU5 | 600,544 | 599,712 | +832 | ||
| SFRZ5 | 662,062 | 655,480 | +6,582 | ||
| SFRH6 | 414,489 | 420,463 | -5,974 | ||
| SFRM6 | 438,799 | 429,121 | +9,678 | ||
| SFRU6 | 305,586 | 299,335 | +6,251 | ||
| SFRZ6 | 270,775 | 276,137 | -5,362 | ||
| SFRH7 | 144,193 | 136,562 | +7,631 | ||
| SFRM7 | 155,407 | 155,348 | +59 | ||
| SFRU7 | 144,242 | 145,294 | -1,052 |
USD: Broader highs for the Dollar
Feb-05 11:12
- Continued broader highs for the Dollar versus the EUR, NOK, SEK, SGD, PLN, ILS.
- USDSEK now test that 50% retracement level of 10.5750, and above the latter, sees 10.62, followed by 10.7328 (61.8% retrace of the Nov/Dec fall).
- EURUSD is just short ~20 pips off the next support noted at 1.2525 38.2% retracement of the Oct 4 - Dec 28 bull phase.
OUTLOOK: Price Signal Summary -GBPUSD Range Breakout
Feb-05 11:04
- In FX, EURUSD maintains a bearish theme and Friday’s steep sell-off plus today’s follow through reinforces current conditions. Fresh cycle lows mark a resumption of the downtrend. Sights are on 1.0724, the Dec 8 low. On the upside, clearance of 1.0932, the Jan 24 high, is required to signal scope for a stronger recovery.
- GBPUSD has breached support at 1.2597, the Jan 17 low and the base of a range that has been in place since mid-January. A clear range breakout would strengthen a bearish condition and pave the way for weakness towards 1.2500, the Dec 13 low. Initial resistance is at 1.2697, the 20-day EMA.
- The USDJPY trend outlook remains bullish - Friday’s strong rally reinforces this condition and today's high has resulted in a print above key resistance at 148.80, the Jan 19 high. A clear break of 148.80 would confirm a resumption of the uptrend that started late December and open 149.16, 76.4% of the Nov 13 - Dec 28 bull leg. Scope would also be seen for a climb towards 149.75, the Nov 22 high. Key short-term support lies at 145.90, the Feb 1 low.
