LATAM FX: USDMXN At Fresh Cycle Low, Chile’s Kast To Announce Cabinet Tomorrow
Jan-19 18:05
- The US dollar has edged steadily lower throughout Monday's session amid the escalating tensions surrounding Greenland and President Trump’s associated threat to impose tariffs on various European nations. Against this backdrop, BRL and MXN have eked out modest gains against the dollar today, amid low volumes due to the US holiday.
- USDBRL is trading close to its latest lows, having tested support at 5.3447, the 76.4% retracement of the Nov 11 - Dec 22 bull cycle, earlier in the session. Clearance of this support would expose 5.2880, the Dec 4 low. The move comes as Finance Minister Haddad said today that the BCB has room to cut interest rates. However, recent robust economic activity data suggest it may delay the start of the easing cycle until later this quarter.
- Meanwhile, USDMXN has edged down to a fresh cycle low of 17.5764 in recent trade amid prospects for a Banxico easing cycle pause next month. Speaking to MNI recently, former Banxico Deputy Governor Manuel Sanchez said that the recent guidance suggests a pause, although he thinks this could be as short as one or two meetings, before it cuts again. Persistent core CPI data later this week may reinforce those expectations for a pause next month.
- By contrast, CLP has traded slightly on the backfoot on Monday amid an ongoing state of emergency in the south of the country due to the recent wildfires. Nonetheless, the trend condition in USDCLP remains bearish, amid strong copper prices, and sights are still on 878.22, a Fibonacci projection. Focus tomorrow turns to President-elect Kast, who is due to announce his cabinet members.
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AUSSIE 10-YEAR TECHS: (H6) Marked Lower
Dec-19 23:15
- RES 3: 95.982 - 76.4% retracement Sep’24 - Nov’24 downleg
- RES 2: 95.960 - High Apr 7 (cont.)
- RES 1: 95.900 - High Oct 17
- PRICE: 95.160 @ 15:32 GMT Dec 19
- SUP 1: 95.120 - Low Dec 10
- SUP 2: 95.087 - 2.0% Lower Bollinger Band
- SUP 3: 94.276 - 1.0% 10-dma envelope
Aussie 10-yr futures remain well toward the bottom of the recent range, having taken out all major support levels in the process. With 95.275 cleared, prices are pushing to new contract lows, opening vol-band support through 95.087 and into 94.276. Any recoveries need to break back above 95.900 to signal near-term bullish traction.
AUDUSD TECHS: Corrective Phase Still In Play
Dec-19 21:00
- RES 4: 0.6759 High Oct 11 ‘24
- RES 3: 0.6723 High Oct 21 ‘24
- RES 2: 0.6707 High Sep 17 and a key resistance
- RES 1: 0.6661/86 High Dec 16 / 10
- PRICE: 0.6608 @ 15:56 GMT Dec 19
- SUP 1: 0.6593 Low Dec 18
- SUP 2: 0.6566 50-day EMA
- SUP 3: 0.6517 Low Nov 27
- SUP 4: 0.6466/21 Low Nov 26 / 21
The trend condition in AUDUSD remains bullish and the latest pullback appears corrective. The move down is allowing a recent overbought condition to unwind. Support at the 20-day EMA, at 0.6598, has been pierced. The 50-day average is at 0.6566. The area between the two averages represents a key short-term support zone. A resumption of gains would refocus attention on key resistance at 0.6707, the Sep 17 high and bull trigger.
LOOK AHEAD: US Macro Week Ahead: Long-Awaited Q3 GDP Plus Labor Updates
Dec-19 21:00
- The week ahead sees a slimmed down data schedule after a particularly busy few weeks, including distorted NFP and CPI reports in the week just gone. There are still some important releases though, with the highlight being the long-awaited “initial” Q3 GDP release on Tuesday.
- This report will replace what would have been the second GDP and the preliminary corporate profits estimates, with the extended tracking window of the Atlanta Fed’s GDPNow pointing to strong real GDP growth of 3.5% annualized after an average 1.6% in 1H25 (-0.65% in Q1 before 3.84% in Q2).
- Expect continued close attention on private demand, best seen by Powell’s preferred PDFP category, which is currently tracking at ~2.4% annualized for similar to the 2.4% averaged in 1H25 (1.9% Q1 before 2.9% in Q2).
- Tuesday also sees updates for the weekly ADP tracker in the four weeks up to Dec 5, getting closer to the reference period for the monthly report, after last week’s further improvement. It’s followed by useful updates for Q4 GDP tracking with durable goods for October and industrial production for both October and November, before the Conference Board consumer survey for December with its closely watched labor differential having stalled at subdued levels but not deteriorated further since September.
- Note as well that Wednesday then sees weekly jobless claims a day early ahead of Christmas Day, with continuing claims capturing the December payrolls reference period. There is currently minimal Fedspeak scheduled and we suspect this will remain the case ahead of Christmas, likely confined to media appearances if any.
