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Positive Session For Regional Currencies Amid Lower US Yields

LATAM FX
  • The swift reversal lower for US treasury yields in the aftermath of the US CPI report has provided a benign backdrop for Latin American currencies on Wednesday. Perhaps also taking its cues from the firmer Chinese Yuan, outperformance across the region has been notable with the Chilean peso leading the charge.
  • The USDCLP (-1.30%) significant move lower comes amid comments from Finance Minister Marcel who reiterated his optimistic stance for the economy, stating that Chile “started combining fiscal policy with monetary policy to stabilize the economy and that job is almost complete”, also emphasizing the continued easing of pressures on inflation.
  • There may also be short-term factors in play here as USDCLP briefly pierced the psychological 900 level on Tuesday and failed to breach the barrier again today, printing a high of 898.88 before grinding lower for the rest of the trading session. Key support is at the 50-day EMA - at 849.71. The 20-day EMA lies at 868.55.
  • Similar optimism has been seen for MXN, BRL and COP, all rising between 0.5-0.8% against the greenback. USDMXN has pierced initial support at the 50-day EMA which intersects at 17.1337. USDBRL is still broadly respecting the well established short term range between 4.85-5.00.
  • A very light data docket on Thursday before the Peru central bank decision after market close.
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