Category Archives: Research

Futuro del peso mexicano 16-5

  • Dollar strength is going to offset some of the Fed’s need/will to tighten
  • March 2015 Fed fretted about dollar strength before hiking in December
  • USD TWI was 103 in March 15, dipped 98/99 before the next hike in Dec 2016
  • USD TWI today 99.63, low versus USD level when rates first hiked
  • With rates +150bp @ 1.75%, terminal rate eyed 3%, USD may be an issue
  • Effective tightening of USD rise may delay Fed. Hikes priced for June/Dec
50 HMA= 506.20
Futuro del peso mexicano 16-5
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Futuro del peso mexicano 14-5

  • USD/MXN opens NY 19.3925 v 19.441 Fri cls, dips slightly; o/n 19.4055-19.301
  • DXY offered (0.24%), Banks eye short USD bias
  • AMLO lead widens v Anaya , likely aids leftist in congress
  • USD/MXN supt 19.2998 10-DMA/Mon low area, 19.2668 200-HMA, 19.155 Fri low
  • Res 19.4055 Mon high, 19.4397 23.6% of Apr-May rise, 19.5935 May 10 high
200 HMA= 515
100HMA= 512
Futuro del peso mexicano 14-5

Futuro del peso mexicano 11-5

  • USD/MXN opened NY 19.202 vs Thurs 19.22 cls, rises a tad; o/n 19.32-19.1975
  • Peso firm post-US CPI miss Thurs , USD-DXY longs taking profit
  • UST 10-yr backs away from 3% relieves some pressure on EM CCYs
  • US futs still se 2+hikes in 2018, MXN headwinds NAFTA & AMLO (elex) remain
  • USD/MXN supt 19.2126 10-DMA, 19.1975 Fri low, 19.0261 38.2% of 17.94-19.6975
  • Res 19.3081 upper 21-h Bolli, 19.3382 daily pivot, 19.4276 55-HMA
200 HMA= 516.60
Futuro del peso mexicano 11-5

Futuro del peso mexicano 9-5

Oil Prices Surge and Dollar Gains Extended Post Withdrawal Announcement

  • US dollar rally continues
  • Equity markets are mostly higher and oil prices surged to new highs
  • Bond yields firm, with the US 10-year pushing back above 3%
  • Argentina seeks a flexible line of credit, but it is not clear it qualifies
  • Dollar LIBOR has begun converging with other unsecured funding rat

Futuro del peso mexicano 9-5

Futuro del peso mexicano 7-5

Key releases in the May 7-11 week are limited to the Producer Price Index on Wednesday and the Consumer Price Index on Thursday

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 Richmond Fed President Barkin will give his first public appearance since taking office on January 1.
Fed Chairman Powell will participate Tuesday morning in a panel on “Monetary Policy Influences on Global Financial Conditions and International Capital Flows”.
Atlanta Fed President Bostic (voter, dovish) will speak Wednesday on the economic outlook and monetary policy, and St. Louis Fed President Bullard (non-voter, dove) will give a presentation Friday on the U.S. economy and monetary policy.
We believe the appearances by Barkin and Powell will be the most influential for markets.
50 HMA= 518
Futuro del peso mexicano 7-5

Futuro del peso mexicano 4-5

US Jobs Report Not the Driver It Once Was

  • Jobs data is the main event; the focus in recent months has shifted from healthy trend job growth to average hourly earnings
  • UK Prime Minister May is in a pickle; the Bank of England meets next week
  • The eurozone disappointments continue to mount this week with weak PMI readings today
  • The RBA lifted its core inflation forecast and signaled that while rate would eventually need to increase, it did not anticipate doing so in the near-term
  • TRY continues to make new all-time lows; yesterday, Argentina’s central bank hiked rates 300 bp; Philippines April CPI rose 4.5% y/y
50 HMA= 521
100 HMA= 524
Futuro del peso mexicano 4-5.png

Futuro del peso mexicano 3-5

  • USD/MXN opened NY 19.0065 v 19.09 Wed cls, up a touch; o/n 19.11-18.9535
  • MX Trade, political headwinds aid USD; EMs wary of higher US rate outlook
  • Less hawkish Fed hold tempers USD rise, recent USD short may lighten pre-NFP
  • USD/MXN res 19.0548 daily pivot, 19.11 Thurs high, 19.2040 upper 21-d Bolli
  • Supt 18.9598/35 lwr 21-h Bolli/Thurs low area, 18.8332 rising 10-DMA
523.40= 50 HMA
527= 200 HMA
Futuro del peso mexicano 3-5

FX Market Update 2-5

Market Briefs
• EUR/USD 0.05%, USD/JPY -0.03%, GBP/USD 0.32%, EUR/GBP -0.27%
• DXY -0.07%, DAX 1.13%, FTSE 0.46%, Brent -0.03%, Gold 0.55%
• EZ Apr Markit Mfg Final PMI, 56.2, 56.0 f’cast, 56.0 prev
• DE Apr Markit/BME Mfg PMI, 58.1, 58.1 f’cast, 58.1 prev
• GB Apr Markit/CIPS Cons PMI, 52.5, 50.5 f’cast, 47.0 prev
• Close Xi aide to meet U.S. trade delegation in Beijing
• German economy minister urges EU unity in trade conflict with U.S.
• Pro-Brexit lawmakers pressure British PM May over customs plan
• EU proposes to set aside euro zone money in next budget
• EZ Q1 GDP Flash Prelim YY, 2.5%, 2.5% f’cast, 2.7% prev,2.8% rvsd
• EZ Q1 GDP Flash Prelim QQ, 0.4%, 0.4% f’cast, 0.6% prev, 0.7% rvsd
• EZ Mar Unemployment Rate, 8.5%, 8.5% f’cast, 8.5% prev
• FR Apr Markit Mfg PMI, 53.8, 53.4 f’cast, 53.4 prev
• IT Q1 GDP Prelim QQ, 0.3%, 0.3% f’cast, 0.3% prev
• IT Q1 GDP Prelim YY, 1.4%, 1.4% f’cast, 1.6% prev
• IT Apr Markit/ADACI Mfg PMI, 53.5, 54.5 f’cast, 55.1 prev

Looking Ahead – Economic Data (GMT)
• 11:00 U.S. MBA Mortgage Applications, -0.2% prev
• 11:00 U.S. Mortgage Market Index, 398.5 prev
• 11:00 U.S. Mortgage Refinance Index, 1,145.5 prev
• 11:00 U.S. MBA 30-Yr Mortgage Rate, 4.73% prev
• 12:15 U.S. Apr ADP National Employment, 200k f’cast, 241k prev
• 18:00 U.S. Fed Funds Target Rate, 1.5-1.75% f’cast, 1.625% prev

Looking Ahead – Events, Other Releases (GMT)
• 11:40 ECB’s Ignazio Angeloni’s speaks at FT-Fitch Global Conference – London
• 12:00 Sweden Central Bank’s Stefan Ingves speaks at FT Global Conference – London
• 18:00 Fed’s FOMC announces decision on interest rate

Currency Summaries
EUR/USD 

• Traders widely paring longs with EUR/USD falling to 1.1981 Monday
• Today’s data to remind a more neutrally positioned market why it should buy
• Slow grind higher through early Europe with a 1.2032 high but offered there
• EZ GDP in-line 2.5% from 2.8%, strongest rate in 10 years
• Eurozone unemployment seen unchanged at 8.5%, last lower in Dec 2008
• EZ PMI f/c unch @ 56.0. Similar level springboard EUR/USD’s H1 2017 rally
• German PMI f/c 58.1, only seems weak vs stellar data recently seen over 60

USD/JPY
• More near-term USD/JPY shorts taken out since last Wed remain vulnerable
• Session range has been 109.65-109.92, as spot hits highest level since Feb 5
• Profit taking in Asia blamed for USD/JPY failing to reach 110.00
• Talk also that Japanese exporters near 110.00 may impede upward progress
• Tue’s rise was the twelfth biggest one-day gain of 2018, however
• Bulls have momentum, eyes 200-DMA, 61.8% Fibo at 110.23, 110.24 respectively

GBP
• Cable extended north from 1.3581 to eye 1.3667 on UK construction PMI beat
• 52.5 vs 50.5 f/c. First UK economic data beat for over a fortnight
• 1.3667 was Tuesday’s Ldn am low. 1.3581 = early Europe 4mth low
• Drop to 1.3581 was spurred by Brexit-related news re: BBC report
• Hard Brexit faction in Tory party deny issuing threat over EU customs union
• 1.3588 was Tuesday’s low after UK mfg PMI miss. UK service PMI Thursday

CHF
• And now the adj as USD/CHF comes off its 0.9971 trend high
• Broad pullback in the USD albeit tentative at best so far
• Position adjusting ahead of tonight’s FOMC conclusion cited
• USD/CHF plays 0.9969 to 0.9938 and is offered into New York
• EUR/CHF easing with spot and eyes range lows at 1.1926
• Cross plays 1.1960-1.1940, Monday’s 1.1936 initial support
• Swiss Mar sales down 1.8% y/y vs -0.2% Feb, Apr PMI 63.6 vs 60.3

USD/CAD
• USD/CAD elicited fresh support pre-1.2800 after sliding from 1.2857
• 1.2803 = European am low. 1.2857 was Asia low
• Monday’s low was 1.2807–before rise to 2mth high of 1.2914 Tuesday

AUD/USD
• Profit-taking on shorts helped inflate AUD/USD to 0.7529 European am high
• 0.7476 was Asia low (four pips shy of Tuesday’s 11-month low)
• FOMC statement due 1800GMT, hawkish hold expected
• Large 0.7500 option expiry Thursday, AUD 950mn strike

NZD/USD
• NZD/USD rose from 0.7006 to threaten 0.7034 during the European am
• 0.7034 was Asia high, before it dropped to threaten 0.6991
• 0.6991 was Tuesday’s 2018 low. 0.7000 expiry Thursday, NZD 232mn strike
• Large AUD/NZD 1.0725 option expiry Friday, AUD 700mn strike

FX Options
• Dollar gains falter pre Fed, potential for hawkish statement to reignite bid
• FOMC risk premiums on the low side, but no hike expected until June
• USD call options most notable against Euro, strikes to 1.1500
• USD/JPY topside flows remain light, exporters to limit any gains above 110 barrier
• GBP off lows, 1.35 barriers look safe, limited hedging flows below 1.3500, vols peak

COMMENTS
Dollar bulls seek close above Fibo after big rise

The dollar has started off May with a bang and rising momentum means further gains are likely. The USD index, which tracks the greenback versus a basket of six currencies, registered the third biggest one-day points rise of 2018 on Tuesday. This led to a probe of the 92.515 Fibo — 61.8% retrace of the 95.150 to 88.251 (October to February) fall — a weekly close above which will pave the way to 93.522 — 76.4% retrace of the same rise. The ultimate target for bulls seeking a bigger recovery is the 200-WMA which currently comes in at 94.577. This week’s 91.480 low provides further support for the index as it is near the 30-WMA at 91.624. Fourteen-week momentum is increasingly bullish, after flipping from negative to positive last week, further highlighting the new found robust outlook for USD. Therefore bears will only be comfortable if they manage to force a weekly close back below the 30-WMA. 2018 Top 10 One-Day USD Index Rises Chart:

GBP/USD 200-DMA could force a short squeeze
Sterling bears are still very much in control but a looming 200-DMA support point might force some profit-taking in cable. The average is at 1.3534 today and has supported cable since a bullish breakout in April 2017. However, it’s worth noting that the market paid scant regard for the 100-DMA, which had also provided long-term support. The price convincingly broke the average on April 27 with a 1.3% decline. Counter-trend positioning at market or just ahead of the 200-DMA with a tight stop might prove profitable. Poor UK data with implications for the BoE rate outlook has shaped a 12-day sterling bear run culminating in a 1.3581 trend low early Tuesday. A subsequent small rebound to 1.3648 might feed into a stronger adjustment back inside the 30-DMA Bollinger envelope, the lower line is at 1.3705 today and serves as an initial target. The 100-DMA at 1.3880 is also a viable retracement level. A low at 1.3460 from early November provides a natural stop point not too far from the 200-DMA.

Futuro del peso mexicano 2-5

There’s really no specific news behind this week’s EM washout.  Higher US rates are one major factor, perhaps ongoing trade tensions are another.  Yet this week’s price action is simply a continuation of the trend that’s been seen all quarter.  For Q2 so far, every EM currency is down except for PHP, with the worst performers being the high beta group RUB, ZAR, BRL, MXN, and TRY.  Many currencies have seen their Q1 gains wiped out in Q2, and then some.  This trend should continue, as we don’t really get the sense anyone wants to step in front of this freight train now.

50 HMA= 527.40
200 HMA= 528.50
Futuro del peso mexicano 2-5