NY Open – US data still stands out
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The overnight session saw a round of data misses, including UK GDP, AUD employment, Japan GDP and CZK CPI. Follow-through has been limited given idiosyncratic factors and US data ahead. US Treasuries rallied in a bull flattening curve in low volumes, helping USDJPY to test 150. Global equities are modestly higher, but US futures trade flat. USD struggled with direction, with our eTrading desk confirming FX interbank volumes were 1/3 below average. EURUSD continues its bounce off 1.07, with ECB’s Lagarde stressing patience overnight. A Washington Post report seems to be driving ILS higher and crude oil lower on the geopolitical front. Ahead, focus turns back to US data. Citi Economics is significantly below consensus for total retail sales, forecasting -0.6%MoM for headline on weak unit auto sales and a modest 0.1% print for control group. Initial jobless claims, Philly business outlook and IP will simultaneously print. Fed’s Waller will touch on USD in the afternoon but as for central bank speakers, our focus is on RBNZ’s Orr at 13:40 EST. CLP will underperform on dovish BCCh minutes, COP Q4 GDP data comes into focus. CZK CPI miss was more sizable than PLN overnight, while BSP was a tad dovish. |
COP – COP moved higher today in-line with the majority of the LatAm complex. In Colombia today, retail sales surprised to the downside, coming in at -4.7% YY versus -2.3% YoY expected. Tomorrow, Colombia will report GDP, which will likely have risen 0.8% in the fourth quarter from a year earlier. Our trader thinks this print will largely be a non-event, but does note that a large miss could see a negative reaction due to a potential path for lower rates. In our FX Strategy team’s February outlook, they note that COP’s rate differentials following a smaller than expected 25bp cut in their last policy meeting will likely drive good performance relative to peers due to attractive carry. Read more here. Our trader continues to believe that USDCOP will trade in a range in the short term (3900-3945) but does note that positioning has started to feel a big stronger skewed toward long COP, specifically from hedge funds. In terms of flows, our trader saw mixed activity from real money in cash as well as better COP outflows in the NDF space.