Summary 1/2

MEXICO - Limited domestic news flow has kept price action at the mercy of broader global themes. Continued upward momentum in commodities and overall USD selling sees USDMXN back towards the lower end of its range. 19.70 is the notable level on the downside a break would constitute a bear trigger in the pair.

*Focus will turn to CPI tomorrow and then the minutes from Guzman's final meeting at Banxico.

BRAZIL - Another bout of BRL weakness early in the session saw USDBRL through Dec 28 highs, peaking at its first resistance point (gap fill) of 5.3530. Multiple resistance points in the pair between 5.35 and 5.45 may slow any further BRL depreciation.

The rates market was more telling with swap rates moving higher across the curve. Swap rates were up ~18bps in the belly of the curve at their top. Some analysts attributed this move to an increased likelihood of having to extend the emergency payments to informal workers, however, Bolsonaro, has been fairly vocal recently that this has definitively come to an end. With Congress currently on recess it is difficult to pinpoint exact sentiment regarding the fiscal situation and more likely the move in rates was a small retrace from the stellar moves seen throughout December and as a result of a soft BRL.