NY Open – Pay attention
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Japan Rengo wages are settled at 5.38%, the most in over 30y, with markets now largely pricing for BoJ to tighten at next week’s meeting. There’s asymmetric upside risks for USDJPY, our economists still keep their base case of April for tightening. Elsewhere, USD holds onto gains, high-betas and Asia FX lag. US equity futures modestly higher, while front-end USTs flat. In UK, BoE/Ipsos expectations eased, we also see downside risks to Feb CPI next week. U Mich 1y expectations (10:00 EDT) are expected to rise towards 3.2% on the back of higher gasoline prices, 5-10y component unchanged at 2.9%. Beforehand, IP and Empire manuf. should remain soft. In EM, PEN expects Economic Activity at 11:00 EDT. Copper broke above 9,000 which should provide tailwinds for CLP. |
COP – USDCOP continued its grind lower today, as COP performed well despite a broadly stronger USD and weaker LATAM peers (except for CLP). Offshore demand for COLTES has continued driving COP inflows, and therefore COP performance, without driving away those already positioned in the currency as carry remains attractive (a factor that was reinforced by Villar’s comments yesterday). Additionally, the currency has remained supported by the theoretical end of Banrep’s reserve program this month, in which the Central Bank had been passively buying 1.5b USDCOP. Flow-wise today we saw COP inflows from HF names, although hedged with swaps.