NY Open – Whirlwind continues
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BoJ keep bond purchases unchanged until July, driving a dovish JPY response, though Ueda skewed slightly hawkish and kept July hike risks on the table. USDJPY retreats towards 156, after touching highs of 158.25 overnight. Risk sentiment soured in the Europe session, European FI leading losses. EURUSD broke below 1.07 overnight, and French index CAC 40 has erased gains this year. Growing French political risks remain in the forefront for markets, as were concerns on the German coalition. 10y Bund-OAT spreads widen to multi-year highs. OAT spread widening should continue, according to our strategists. USTs are dragged higher in tandem. Fedspeak is back, Mester features thrice starting from 08:30, Goolsbee speaks at 14:00 EDT. Characterization of recent data (labor, and CPI) is in focus. U Mich survey comes out at 10:00. We expect a headline acceleration, and inflation expectations to moderate slightly. SEK underlying inflation beat expectations slightly. In EM, focus is on Colombia’s budget presentation at 11:00 EDT. PEN saw unchanged rates. ZAR is the sole FX outperformer, after it was confirmed that the GNU will consist of a market-friendly coalition. |
COP – COP is the worst performer in the region so far this session, having lost -2.64%. Today, our traders saw only COP outflows in what they believe is the same story as yesterday. The currency is trying to open lower and HFs and Systematic names quickly stepping in to buy USD. Liquidity is not the best as market is gapping quickly higher. No one has stepped in yet to fade the move as it feels like the currency is triggering stop after stop from all client types. It is starting to look like a good opportunity to fade this move but tomorrow’s MTFP presentation generates some extra caution. They say they would try to fade the spike with a short stop given conditions but are looking for a mean reversal and for USDCOP to trade back in line with the region.
