CHILE: CPI Inflation Expected to Fall Further Below 3% Target in February

* Tomorrow's February CPI inflation data will be a key input for the BCCh ahead of its March 24 MPC meeting. Latest survey data from before the middle east conflict indicated that a final 25bp cut to a neutral 4.25% was widely expected this month. However, market developments this week and renewed pressure on the CLP may prompt the central bank to adopt a more cautious stance and delay the next rate cut for now. BCCh deputy Governor Naudon said yesterday that the key element for the BCCh amid the conflict in the middle east is how persistent the Iran shock is. * After falling below the 3% target for the first time since March 2021 in January, headline inflation is expected to decline another 30bp to 2.5% y/y in February, supported by a lower electricity prices. However, the central bank's preferred core ex-volatiles measure is likely to remain above the 3% target (vs. 3.4% y/y in January). * Scotiabank expects a 0.1% m/m increase in prices, driven by gains in services against downward pressure from volatile items. They also note that the headline reading will be weighed by the implementation of new power bills prices that leaked into February instead of being captured in January. Coupled with recent weakness in labour market and economic indicators they still expect a 25bp BCCh rate cut this month.

FOREX: Weaker Risk Boosting Dollar Indices, AUD and EM FX Pressured

* Ongoing upside for crude prices (WTI rising 7.5%) and pressure on the major equity benchmarks have boosted dollar indices on Thursday, resulting in downside for higher beta currencies within the G10 and for the emerging market FX basket. The DXY (+0.47%) stands at 99.22 as we approach the APAC crossover, still well shy of the peak earlier in the week but remains 1.65% higher on the week. * Downside for AUDUSD has been most notable, as the ongoing volatility for the Aussie continues to be a key characteristic of currency markets. Spot is currently down 1.3% at 0.6982 on the session as the risk sentiment wanes. * Despite the move lower, bullish conditions remain intact after support at the 50-day EMA held Tuesday, intersecting now at 0.6931. Short-term parameters for the pair are well defined, with a cluster of significant resistance building between 0.7125-50. Potential positive news around the Strait of Hormuz may be required for a convincing move above that cluster as AUD's risk sensitivity would add to Australia's significant exposure to flows through the strait in such a case. * Elsewhere, major currencies such as EUR, JPY and GBP are all moving in lockstep with the dollar index adjustments. USDJPY continues to hover just shy of the 158.00 handle - should we break back above the weeks highs, spot will re-enter an important area between 158.20-159.20 where prior rate checks from both the BOJ and Fed were reported to have taken place in January. * In emerging markets, risk dynamics are substantially boosting USD/LatAm, with the likes of USDMXN and USDBRL extending their intra-day climbs to over 1%, while USDCLP has advanced a further 1.8%. In CEEMEA, weakness for gold and higher natural gas prices are significantly weighing on ZAR and HUF. * While the primary driver for global markets remains the US/Iran conflict, markets will also have to grapple with US employment data Friday. Nonfarm payrolls are expected to increase 55k in February with gains coming entirely from the private sector, pulling back from a surprisingly strong January.

MEXICO: Analysts Expect Banxico Rate Cut In March – Citi Survey

* Analysts now expect Banxico to resume its easing cycle with a 25bp cut at the March 26 MPC meeting, rather than in May, according to the latest Citi survey which has just been released. The year-end policy rate forecast remains at 6.50%. * The expected cut comes despite persistent inflation pressures, with headline inflation still seen ending this year at 4.00%, while core inflation closes the year at 4.20% (up from 4.15% seen previously). * 2027 CPI estimates also edged higher, with headline inflation seen ending the year at 3.78% (vs. 3.73% previously) and core inflation at 3.76% (vs. 3.74% previously). * The 2026 GDP forecast ticked up to 1.50%, from 1.40%, while the 2027 estimate was unchanged at 1.80%. * Meanwhile, analysts see USDMXN reaching 18.18 by year-end, down slightly from 18.20 expected previously.

BRAZIL: Trade Balance Rises To $4.2bn In February, Marginally Above Consensus

* "*BRAZIL TRADE SURPLUS AT $4.208 BILLION IN FEB." - BBG * "*BRAZIL EXPORTS TOTAL $26.306 BILLION IN FEB." * "*BRAZIL IMPORTS TOTAL $22.098 BILLION IN FEB."