MEXICO: USDMXN Holds Near Cycle Lows, Mounting Concerns Over Tariff Plan
Sep-12 10:30
- USDMXN continues to hold below the 18.50 handle ahead of the NY crossover, close to cycle lows, after the pair closed below this level last night. The clearance of the previous bear trigger at 18.5109, the Aug 13 low, opens the way for a move down to 18.4302 next, the Aug 1 ‘24 low, and 18.1837, the 61.8% retracement of the Apr 9 ‘24 - Feb 3 bull leg.
- The move lower has come despite mounting concerns following the announcement of a plan to raise tariffs on goods imported from China to as much as 50%. Yesterday, the China Chamber of Commerce and Technology Mexico called on the government to reconsider its tariff threat. The chamber, which represents both Chinese companies operating in Mexico and Mexican businesses operating in China, said that the tariffs will hurt growth and spur inflation. It is seeking a dialogue with the government on the matter.
- Meanwhile, local media have reported that President Sheinbaum will meet with Canadian PM Mark Carney on Sep 18. The meeting comes ahead of renegotiations for the USMCA, which are expected to start within the next month.
- Today, Economy Ministry Undersecretary of Industry and Trade Vidal Llerenas is due to speak at an event to promote ‘Made in Mexico’ products at 0045BST(1945ET).
- No macro data are due, with a light schedule over the next week to include Q2 aggregate supply and demand figures and August ANTAD same-store sales stats.
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EQUITY OPTIONS: Commerzbank longer dated Put Options
Aug-13 10:25
- CBK (18/12/26) vs (17/12/27) 32p, trades for the 2027 2.14 in 9.5k.
There are no OI in those strikes, new Positions.
GBP: GBP/USD Set to Test Key Resistance
Aug-13 10:23
Latest stretch higher in GBP is putting GBP/USD on course for a test of the major resistance we've flagged at 1.3589: clearance here puts prices at the highest since mid-July fully reverses the fade into the early August lows.
- GBP has been the primary beneficiary of the USD-led weakness in recent weakness - with the contrast between BoE and Fed policy cemented on the hawkish BoE cut last week, limiting the pricing of UK rate cuts into year-end, and through to the Autumn Budget - the next major macro event in the medium-term (likely late October/early November).
- Growth numbers due tomorrow are expected to show a sharp slowing in quarterly growth to 0.1% from 0.7% in the prior quarter - but an upside surprise here would catalyse a move north of the current range and extend the spell of not-as-bad-as-feared UK economic data.
- The downtick in front-end implied GBP vols coincides with improving net risk reversals - likely implying a cheapening of put vol that covers both the Sept and Nov MPC, priced for a cumulative 11bps of cuts across both meetings.
- On GBP, Rabobank write that they see GBP's recent better tone running out of steam, with the BoE cutting in November - with this week's growth data possibly confirming stagflationary fears.
SOFR OPTIONS: SFRU5 96.00/96.125/96.25 Call Fly Blocked
Aug-13 10:21
Latest block trade lodged at 06:00:30 NY/11:00:30 London
- SFRU5 96.00/96.125/96.25 call fly 4K blocked at 1.0, looks like a buyer vs. 95.955 (10% delta).
