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Impulsive Rally Extends

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Late Eurodollar/SOFR/Treasury Option Roundup

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Price Is Below The 50-Day EMA

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Late Corporate Credit Update

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Banxico Rate Decision, Industrial Output Close To Estimates

MEXICO
  • In line with broad US dollar weakness following yesterday’s data, USDMXN has continued to trade with a heavy tone. Firmer equity indices have bolstered the Peso strength which saw USDMXN print fresh recent lows of 19.9134 late on Wednesday.
    • Technically the pair has cleared support at 20.2080, the Jul 29 low suggesting an initial move to 19.8193 next, the Jun 27 low. Key short-term resistance has been defined at 20.8335, the Aug 3 high. Initial resistance is at 20.5004, the Aug 4 high.
  • Data just released:
    • June Industrial Production rises 0.1% m/m; est. -0.1% (BBG)
    • June Industrial Production rises 3.8% y/y; est. +3.9% (BBG)
    • June Mfg Production rises 5.1% y/y; est. +5.0% (BBG)
  • The central bank board is unanimously expected to raise the overnight target rate by 75bps from 7.75 to 8.50% at the August meeting.
  • Ongoing pressures to headline and core inflation, rising inflation expectations and the Fed’s most recent monetary policy action all warrant a continuation of the aggressive pace of tightening.
  • Focus will be on any signals within the statement regarding the depth of the current cycle and whether a hike of the same magnitude can be expected in September.
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  • In line with broad US dollar weakness following yesterday’s data, USDMXN has continued to trade with a heavy tone. Firmer equity indices have bolstered the Peso strength which saw USDMXN print fresh recent lows of 19.9134 late on Wednesday.
    • Technically the pair has cleared support at 20.2080, the Jul 29 low suggesting an initial move to 19.8193 next, the Jun 27 low. Key short-term resistance has been defined at 20.8335, the Aug 3 high. Initial resistance is at 20.5004, the Aug 4 high.
  • Data just released:
    • June Industrial Production rises 0.1% m/m; est. -0.1% (BBG)
    • June Industrial Production rises 3.8% y/y; est. +3.9% (BBG)
    • June Mfg Production rises 5.1% y/y; est. +5.0% (BBG)
  • The central bank board is unanimously expected to raise the overnight target rate by 75bps from 7.75 to 8.50% at the August meeting.
  • Ongoing pressures to headline and core inflation, rising inflation expectations and the Fed’s most recent monetary policy action all warrant a continuation of the aggressive pace of tightening.
  • Focus will be on any signals within the statement regarding the depth of the current cycle and whether a hike of the same magnitude can be expected in September.