Overall FX activity runs 20% higher than 30d averages as dollar weakness extends in Asia. The rest in the G10 FX complex are a touch in the green. USDCNH breaks 0.6% lower after moving through key supports. BoJ’s Ueda noted today that he would mull April policy meeting after his US trip, though this did not impact JPY. USDSGD pares a move higher from a surprise pause by the MAS. Treasury yields and US stock futures run flat on the day.
Technical indicators are in the limelight, and we watch for key weekly closes in DXY, GBPUSD, EURUSD, WTI and Gold (detailed in the publication).
Ahead, we flag earnings from major financials, with focus still on banks post the march banking concerns. A trio of US prints (retail sales, IP and U Michigan sentiment) could potentially reinforce the case USD bears. CPI will be relevant for SEK and ILS. BoE’s Tenreyro and ECB’s Nagel will be interesting for GBP and EUR respectively.
USTs quietly bear-steepen, despite cooling PPI data; DXY USD Index nears YTD low; AUD, NZD lead G10 FX performance; EUR/USD hits a high since April 2022; EGBs twist-steepen, ECB’s Wunsch reaffirms consensus for more hikes; CLP leads regional peers; US 10y at 3.445% (+5.4bp).
Latin America:
Latam currencies were supported by a weaker USD during the session and higher metal prices. CLP strengthened 1.1% to 795 and COP also appreciated 1.1%, to 4410. MXN followed, up 0.4% to 18.00, alongside positive US equity performance. BRL lagged, but ended just 0.2% weaker to 4.93. PEN closed mostly flat for the session.
Duration traded strongly as most curves declined after weaker-than-expected US PPI data and higher jobless claims than expected. Brazil rallied the most as rates fell 11-18bp across most of the DI curve; January 2033 DIs ended 18bp lower at 12.38%. Chile bull-steepened; the 2y fell 14bp to 9.12 while the 10y ended just 3bp lower at 5.19%. This lifted 2s10s 11bp steeper during the session to -272bp. Colombia rates mildly bull-steepened by 2bp to -150bp; 2y in Colombia fell by 5bp to 10.25%. Mexico tracked US rates and bear-steepened by ~3bp to -167bp; TIIE 2y rose 1bp to 10.05% while the 10y rose by 4bp to 8.38%.
