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COP Significantly Lower On Cabinet Reshuffle, MXN Under Renewed Pressure

LATAM
  • Domestic headlines regarding the imminent cabinet reshuffle in Colombia have significantly dented local assets on Wednesday with USDCOP seen 2.4% higher as of writing. Additional pressure is being exerted on local IBR swap rates, shifting between 9-32bps higher across the curve, in a re-steepening move.
  • Market participants will keenly watch ongoing developments surrounding key cabinet posts such as the finance minister. Earlier today, Ocampo said he will present his resignation on protocol and await Petro’s decision, so he is not stepping down. Analysts point out that President Petro is unlikely to create extra volatility by firing the market-friendly minister he chose to calm investors.
  • Elsewhere, the risk-off tone amplified by major equity indices hovering at most recent lows has hampered the Mexican Peso once more. After posting early session lows around 18.03, the pair rose steadily to fresh two-week highs at 18.1896. Focus turns to the advanced reading of US GDP on Thursday as well as Friday’s Preliminary read for Mexican growth data, currently expected at 3.3% Y/y.

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