NY Open – On the rebound
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US yields continue to gradually head higher alongside USD, US equity futures hold steady while European stocks rebound. AUD briefly rallied overnight after a slightly hawkish RBA meeting. We now only price ~6bps of cuts for 2024, with our economists see hike risks greater than cuts this year. Germany ZEW investor confidence stalls, reflecting French political risks. EURUSD holds above 1.07. High focus on US retail sales printing at 08:30 EDT, followed by IP (09:15). Control group sales are set to accelerate, though our economists still see downside risks. 6x Fedspeak appearances: starting with Barkin (10:00), Collins (11:40), Logan (13:00), Kugler (13:00), Musalem (13:20) and Goolsbee (14:00). ECB speak will likely be looked through, though RBNZ Conway’s comments from 17:00 EST could be interesting. Split rate decision expectations for HUF (08:00 EDT) and CLP (18:00), our economists skew dovish, expecting 50bps of cuts for both. |
COP – COP is the sole outperformer of the LatAm complex this session, after USDCOP’s +5.55% move last week, amidst a weaker dollar and underperforming region. Today, the pair stayed within the 4093-4180 range, trading well balanced after two relatively volatile sessions in which the pair went as high as 4200. Flow-wise, we continued seeing RHS USDCOP flows from onshore names in cash, as well as in the NDF by offshore names, although the price action remained more balanced throughout the session, with last week’s move resulting in the considerable reduction of long COP positions.
Trader Take – USDCOP Open June 18
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USDCOP traded lower yesterday in a correction from last week sell off. We saw lower client activity in NDF while in cash RM clients were better buyers of USD. Interbank volume was in line with 30 day average also signaling the lower client activity. The forward curve also moved back lower in line with spot as there is some liquidity starting to come into the shorter end and also to fade the long end spike. I continue thinking there is value in the 6-9month region given the possibility for Banrep to slow their cutting cycle as the Fed delays their cuts. Spot wise with positions clear I think USDCOP can have a correction in line with risk assets and other peers. I continue thinking that we should see USDCOP trading above 4,000 for most of this second semester but last week move was too quick hence I expect some correction on the back of it. Market is opening around 4110 with the first support still at 4094. |