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GILT SUMMARY

Budget And Financial Tightening In The Spotlight

CORN TECHS

(K1) Consolidating

LATAM FX

As we approached month end, equities came under pressure and the DXY has turned from its worst levels. With the commodity complex also lower (BCOM -0.42%), USDMXN and USDBRL have been unwinding some of their recent losses.

  • USDMXN has just matched last weeks best levels at 20.1830 (+ 0.7%). 20.25 is short term resistance with more notable horizontal level at 20.43.
  • Comments from Heath and the recent downtick in inflation will not have helped MXN bulls, with 20.00 appearing a stumbling block for the MXN rally.
  • USDBRL had a very volatile opening few hours as markets digested the BCB announcement on Friday that it would offer up to 16,000 FX swap contracts in a rollover auction on Monday, an increase that was seen by traders as a move to support the real, which may come under pressure toward the end of the year as banks reduce hedge positions.
  • In similar fashion to USDMXN, amid the broad risk off move, USDBRL unwound early losses and is now up just shy of 1% on the day, over 2% off its worst levels.
  • Our Technical Analyst notes the following levels of importance on the topside:
  • - RES 1: 5.4338 20-day EMA
  • - RES 2: 5.5257 High Nov 13 and bull trigger
MNI London Bureau | +44 020 3983 7893 | jack.lewis@marketnews.com