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Further Divergence In Regional FX Post Payrolls

LATAM FX
  • Seeing further divergence in Latam FX in the wake of the US NFP data, with MXN and CLP rallying further on the back of greenback weakness, but BRL remaining under pressure. The heavy two-month downward revision of -167k and even larger 204k two-month downward revision to private payrolls has taken the USD index down by 0.3% on the day. Powell said yesterday that he focuses on private for a better sense of underlying momentum. The miss for wages is also having an impact on USTs, where front-end yields are ~6bp lower.
    • USDMXN fell to 16.8065 initially, but has since bounced to ~16.825 at the time of writing. Having cleared the 17.00 handle in recent days, the next key support is at 16.7852, the Jan 8 low. A break of this level would resume the downtrend.
    • CLP continues to outperform following today’s strong Chile CPI data, with USDCLP now down ~1.7% on the day at 965.2. A clear break of initial firm support at 969.71, the 20-day EMA would signal scope for a deeper retracement, perhaps towards the 50-day EMA at 947.20.
    • USDBRL is up by 1.1% on the day following Petrobras’ disappointing Q4 earnings, approaching the familiar resistance level at 5.00, which has held strong in recent weeks.
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