MNI China Daily Summary: Tuesday, Aug 20

RIKSBANK CUTS POLICY RATE BY 25BP TO 3.5%

China Repo Rates Rise On Tuesday

MNI: PBOC Net Drains CNY236.6 Bln via OMO Tuesday

MNI: PBOC Sets Yuan Parity Lower At 7.1325 Tues; +2.12% Y/Y

MNI: EUROZONE JUN CONSTRUCTION OUTPUT +1.7% M/M, +1% Y/Y

Final Data Broadly Confirms Flash HICP Details

MNI: EUROZONE JUL FINAL HICP +0% M/M, +2.6% Y/Y

RPT-MNI: Canada Sticks To Fiscal Anchors, Spends Chunk Of Windfall

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Prevailing Greenback Bid Weighing on Regional Currencies

LATAM FX
  • Following the two-way action for the USD in the immediate aftermath of the US inflation report, the greenback has been trading on a firmer footing, weighing on the broader emerging market currency basket and pressuring USD/Latam pairs to the highest levels of the session. With broader technical downtrends still being observed across the major pairs, topside resistance levels in focus are the following:
    • USDMXN: Initial resistance is at 17.5811, 38.2% of the Oct 20 - Nov 27 downleg.
    • USDBRL: Resistance at 4.9535, the Nov 10 high, has been pierced. A clear break of this level would ease bearish pressure. This would expose 5.0696, the Oct 31 high.
    • USDCLP: Initial resistance is at $885.74, the 50-day EMA.
    • USDCOP Additionally, our commodities team have noted that crude extends on the earlier decline post-U.S. CPI data, with read through from less dovish Fed pricing and a stronger USD aiding bearish momentum. Time spreads are following the move with Brent Jun24-Dec24 falling to the lowest since May 4 and the prompt Brent spread contango strengthening. Price action may continue to underpin USDCOP as the pair re-approaches the 4000 mark.
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