NY Open – No jitters for Jackson Hole
By Rui Ding
Risk sentiment is on a better footing, partly reflecting expectations for a likely benign Powell appearance. USTs in a tight range with 2s finding support at 4%,helping US equity futures to recover from Thursday’s losses. USDJPY trades flat, but BoJ Governor Ueda’s comments were slightly hawkish for the long-term rate outlook. It was a quiet session in Europe, exacerbated by the upcoming long weekend in the UK.
Powell’s 10:00 EDT appearance at Jackson Hole is the main event. We expect signaling towards a Sep rate cut, but stress data dependence which may allow markets to drift into the weekend. Mentions of labor market risks or overly restrictive rates will be interpreted dovishly. Other Fedspeak includes Bostic, Harker and Goolsbee. Data-wise, we get US new home sales, Canada retail sales and Peru Q2 GDP prints. On the US election front, Harris formally accepted the Dem presidential nomination while RFK Jr appearance scheduled for 14:00 EDT may increase focus on polls.
COP: Here as well, net flows on the week have been rather surprising with more inflows from RM accounts this week. They were seen selling USDCOP on the bounce yesterday (including local RM). Leveraged accounts seem little positioned in COP at this stage so flows were net flat over the past week (and month) from that segment.
COP – Today USDCOP traded ~0.85% higher in line with LatAm peers, having opened higher breaking the 55dMA (4043) and later the 20dMA (4061). On the flows front, our traders saw COP inflows from corporates and RM names, and outflows from leveraged names. Looking ahead, our trader Santiago continues aiming at 4120 to look to sell some USDCOP as there seems to be a good room to trade higher given the recent move of other Latam currencies.
BRL – Outflows
