RECAP

*USDMXN continued its squeeze higher throughout the session as the pair rejected any further selling beneath 19.60. Despite a weaker dollar index, the JPMorgan Emerging Market Currency index struggled and is down 0.2% as of writing. USDMXN made fresh 3-day highs at 19.80 before encountering supply back down to 19.72 (+0.64 on the day).

*Weakness in the Brazilian Real may have impacted sentiment in the region with even USDCLP bouncing 1% off its lows, back to 718.25. USDBRL made fresh highs for the week at 5.40. If pessimism is set to prevail over the coming sessions, 5.52 will be a key hurdle for another leg higher in the pair.

*In a fairly quiet session for G10 currencies, the path of least resistance was higher for USDMXN and USDBRL . Markets seemed lacklustre and eager to test a recent increase in positioning amid an international scenario that continues to favour EM.

*US Equity Indices saw consistent demand to regain positive territory for the day and indicated clear divergence with the LATAM region. IBOVESPA down 1.01% and Mex Bolsa down 0.71%.

*Tomorrow we have Mex Bi-weekly CPI which may give further clues to Banxico ahead of their important February meeting where some analysts believe the easing cycle may recommence.