MEXICO: USDMXN Bear Cycle Remains In Play
May-23 09:30
- USDMXN has continued to edge lower on Friday, after a more volatile session yesterday amid US fiscal concerns and a raft of domestic data, which saw the pair spike to a 19.4592 high before falling back towards the 19.30 level.
- The trend condition in USDMXN remains bearish and today’s gradual 0.3% decline, at typing, brings the pair to around 19.26, narrowing the gap again to support at 19.2429, the Oct 14 2024 low. A break of this level would expose 19.1120, the Oct 4 2024 low.
- Despite this, BBVA says that while MXN has had positive momentum, there are likely limits to gains as the levels have brought opportunistic MXN selling and medium-term loss of carry, slowing growth, and trade tensions can weigh more meaningfully. They continue to expect Banxico to deliver another 50bp rate cut in June, despite yesterday’s mixed data.
- Similarly, Deutsche Bank believes that yesterday’s data are unlikely to shift Banxico from the guided 50bp cut next month. They see the data as neutral for policy, especially considering that the next meeting is over a month from now.
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FOREX: AUDUSD Back Above 0.6409 Resistance, Bullish Conditions Intact
Apr-23 09:29
- Following some volatile price action this week, the more optimistic risk sentiment on Wednesday has prompted AUDUSD to rise back above a prior key resistance level at 0.6409. This reinforces the underlying bullish technical theme for the pair and signals scope for a continuation higher near-term.
- Given the Australian dollar’s higher beta and its close correlation to China sentiment, newsflow regarding the US/China discussions will remain the primary short-term driver for AUDUSD. On tariffs, the President made comments that seemed to relatively soften his stance towards China, which followed Treasury Secretary Bessent's remarks that there is room for talks and de-escalation.
- Sights are on 0.6471 (Dec 9 high) and 0.6550 (Nov 25 high). A more protracted recovery would refocus market participants on the US election related highs at 0.6688. Initial key support to monitor is 0.6299, the 20-day EMA, a clear break of which would be a concern for the bullish narrative.
- In the US, flash PMIs headline today’s data but we think there should also be special mention for the Fed’s Beige Book due at 1900BST/1400ET. Fed officials have been noting a focus on inflation should there be a trade-off with the dual mandate, and we'll be watching the extent to which costs are increasing and ability to pass these increases on.
GREECE T-BILL AUCTION PREVIEW: 26-Week GTB
Apr-23 09:25
| Type | 26-week GTB |
| Maturity | Oct 24, 2025 |
| Amount | E500mln |
| Target | E500mln |
| Previous | E500mln |
| Avg yield | 1.90% |
| Previous | 2.10% |
| Bid-to-cover | 2.03x |
| Previous | 2.04x |
| Previous date | Mar 26, 2025 |
EGB OPTIONS: Large Bobl Put seller
Apr-23 09:22
OEM5 118p sold at 14.5 and 14 in 16.25k.
