Supportive Start To Week As Sentiment Improves

LATAM FX: Strong rebound for local currencies on Monday as the continued strength in equity indices firms up risk sentiment and although dollar indices remain in positive territory, LatAm FX appears back in favour to start the week.

• After briefly printing above 20.00, USDMXN has been consistently offered throughout the US session making fresh lows from last week's close below 19.85. As noted earlier focus will be on 19.55/60 levels with broader themes likely to dominate the price action in a light data week. Earlier, Itau increased Mexico's 2021 inflation forecast to 5.7% From 5.0%.
• The strongest performer has been the Brazilian Real, currently up 1.55%. Following last week's breach of 5.30, the central bank stepped in to intervene, which appears to have put the top in USDBRL for now. Naturally, political uncertainties continue to linger, however the very strong USDBRL rally from 4.90 to 5.30 may have run out of steam. Continued upward revisions to Selic rate forecasts within the central bank survey indicate the likely aggressive action from the Copom in the months to come that may benefit the ccy again.
• USDCLP initially opened higher, closing the gap from Friday's highs to Thursday's closing level at 753.30. After the new marginal highs was made, steady price action in line with regional strength has seen the Peso post a strong day, up 0.75%. Price action was supported by Chile's government revising upwards its projection for 2021 economic growth to 7.5% for 2021, from 6% previously.