NY Open – Feel the noise
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EM election noise remains top focus for markets, though moves reverse in select regions. USDJPY trades back up towards the 156 handle as some carry appetite returns overnight, with MXN reversing losses, too. USD and US yields tick slightly higher, but upcoming data will tell whether moves sustain. ZAR trades shaky after sources suggested a potential government of national unity. India began the government formation process, Nifty reversed losses as alliance partners reiterated support for BJP. US ISM services employment measure at 10:00 EDT is most important heading into Friday’s NFP. The broad index should moderate slightly higher, too. Citi has an out-of-consensus view, expecting a BoC hold vs a 25bps cut (09:45). Regardless of the decision, we are biased towards selling CAD rallies. PLN and KES should see unchanged rate decisions. BRL watches IP at 08:00. |
COP – Halfway through the NY session, COP is the worst performer in the complex as the currency catches up to broad EM weaker price action after a local holiday yesterday. While softer than expected US JOLTS data has somewhat supported G10 currencies throughout the NY session, the carry unwind story continued throughout the day, with the franchise seeing RHS USDCOP flows from both RM and leveraged names, while corporates remained in the sidelines as expected at the start of the month.
