Summary - Subdued Session Sees CLP Firm With Risk

Daily performances for local currencies showed little enthusiasm for the recovery in risk sentiment, certainly in comparison to G10 counterparts.

• MEX - Despite briefly breaching above the 200-day MA above 20.22, USDMXN has traded around unchanged for a lot of the session. Notably, the Peso has been unable to rally even with risk rallying, potentially implying bullish developments for USDMXN. Tomorrow's headline bi-weekly CPI print is expected to ease to 5.65% from 5.74% previously. Given Director Heath's recent comments about the board being more comfortable with headline CPI closer to 5%, the reading will be eagerly watched for clues as to whether Banxico may hike interest rates again at their August meeting.
• BRL - Similarly USDBRL remains little changed on the day, however, a brief pop to 5.2774 was sold into and as the rally in oil gathered steam, the Brazilian Real recovered to trade in positive territory on the day.
• CLP was the outperformer, rallying 0.77% to 752.70, benefitting from a stronger commodity complex. Interestingly, the S&P Ipsa which had outperformed this week following the weekend's primaries, actually retreated around 0.25% today. This relative underperformance came amid multiple sell-side institutions advising caution over Chile assets.
  • Goldman Sachs, RBC and BBVA suggested that market participants stay on the sidelines as Chile picks a new president amid a simultaneous rewrite of the constitution. All suggesting the nation may be heading to a new era of bigger deficits and a move away from policies that prioritized business and the economy.