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Initial Dollar Pop Faded Immediately

  • Both USDMXN and USDBRL had brief spikes to the best levels of the day on the release of the FOMC statement, however, initial dollar optimism has been sold into and local currencies have reversed.
  • USDMXN reached 20.0329 before resuming a small downtrend over the past week since peaking at 20.25 last week. The price action supports the noted bearish technical theme that continues to dominate. A break lower may expose 19.7059, Jun 25 low and 19.5987, the Jun 9 low.
  • In very similar price action but with a greater magnitude USDBRL printed 5.1915 and has since narrowed the gap to the Jun 16 close at 5.1152.
  • Both Chilean and Colombian Pesos have risen in line with greenback weakness, reversing some of yesterday's poor performance.
  • Some minor Brazilian IGP inflation data due tomorrow but the bulk of the domestic event risk will feature on Friday.
  • Mex GDP, Brazilian unemployment rate and Budget Balance, Chilean central bank minutes and unemployment rate.
  • The main event will be the Colombian central bank rate decision and statement. Currently, all 20 analysts expect an unchanged decision, however, with many forecasters highlighting a potential lift-off at the September meeting, BanRep's communication will be eagerly anticipated.

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