COP quiet yday relative to last few days but w some swings. We saw macro funds selling USD on the early move lower to 4435 followed by a flip to USD buying from real money and model names on the retrace towards 4485.
In the chaos of the last week, local pension fund report was released for Oct. Recall the big spot move from 4178 to 4409 in that time. Interestingly, active FX hedges did NOT change much, just a mere $50m increase. Value of the USD portfolio dropped, but mainly due to substantial move higher in US yields. Therefore, the % of the portfolio (looking at the moderate funds) hedged back into COP increased from 37.1% to 38.5%. Importantly, though, the value of COP assets dropped more than the USD assets, so funds actually became even more dollarized at 34.4 vs 34.1% prior, which is historically high. Overall, this shows there was not a local offer >4400 the last few days of Oct (which was something we thought we might see). Seems the bar to hedge out USD assets is very high, but the scope and need to do so remains if USD assets outperform.
Our trader is tactically flat COP looking to re-engage a USD long on a dip.
NY Open – Fizzle
 |
|
A quiet end to the week, with US assets starting to soften. As Dec FOMC pricing moves closer to 15bp following Powell’s assertion that they do not “need to be in a hurry” to cut rates, US equity futures point -0.5% lower. USDJPY retracement partly reflects USD losing steam, but also anticipation into BoJ Ueda’s speech Monday. China real economy data for Oct was solid, UK Q3 GDP fizzled. US retail sales at 08:30 EST followed by a plethora of FOMC speakers. Risks skew slightly dovish, with Citi Economics forecasting headline and control group retail sales flat vs 0.3%MoM consensus. Fedspeak continues with Collins, Goolsbee, Williams who typically skew dovish as well as Barkin. MXN awaits the fiscal budget announcement formally presented to Congress from 11:00 EST, especially after Moody’s credit rating outlook downgrade to negative. BRL markets closed. |