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Andeans Outperforming, BRL a Notable Laggard

LATAM FX
  • Noticing a divergence in Latam FX Wednesday with CLP outperforming on the back of the more cautious stance from BCCh and COP benefitting from the continued climb in oil, while the Brazilian real has moved to its weakest level against the dollar since last October.
    • USDCLP is trading approximately 1% lower early in Wednesday’s session, after BCCh delivered the expected 75bp rate cut, but conveyed a more cautious tone with regard to the pace of rate cuts ahead. USDCLP medium-term trend conditions remain bullish and the current pullback is considered corrective. Attention is on resistance and the bull trigger at 990.67, the Feb 26 high. On the downside, key support has been defined at 935.63, the Mar 15 low.
    • USDCOP is also 0.9% lower at the time of writing, taking the pair to the lowest level since June 2022. The further rise in oil prices to their highest since mid-2022 is supporting the peso, while real yields remain attractive vs. peers for now.
    • USDBRL has ticked higher on the open as fiscal concerns have risen following Planning Minister Simone Tebet’s remarks yesterday that a re-discussion of the government’s fiscal targets for 2024 and 2025 is a possibility. Softer iron ore prices are also providing a headwind. Bullish conditions in USDBRL remain intact and attention is still on 5.0983, the Oct 20 ‘23 high.
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  • Noticing a divergence in Latam FX Wednesday with CLP outperforming on the back of the more cautious stance from BCCh and COP benefitting from the continued climb in oil, while the Brazilian real has moved to its weakest level against the dollar since last October.
    • USDCLP is trading approximately 1% lower early in Wednesday’s session, after BCCh delivered the expected 75bp rate cut, but conveyed a more cautious tone with regard to the pace of rate cuts ahead. USDCLP medium-term trend conditions remain bullish and the current pullback is considered corrective. Attention is on resistance and the bull trigger at 990.67, the Feb 26 high. On the downside, key support has been defined at 935.63, the Mar 15 low.
    • USDCOP is also 0.9% lower at the time of writing, taking the pair to the lowest level since June 2022. The further rise in oil prices to their highest since mid-2022 is supporting the peso, while real yields remain attractive vs. peers for now.
    • USDBRL has ticked higher on the open as fiscal concerns have risen following Planning Minister Simone Tebet’s remarks yesterday that a re-discussion of the government’s fiscal targets for 2024 and 2025 is a possibility. Softer iron ore prices are also providing a headwind. Bullish conditions in USDBRL remain intact and attention is still on 5.0983, the Oct 20 ‘23 high.