Today’s liquidity is likely to be poorer as both the US and UK are on holidays, meaning the two major sources of liquidity for the North American FX session will be working at half steam, suggesting a very quiet day. The performance of LATAM FX over the past week, where PEN and MXN saw some of the heaviest losses is consistent with positioning being the major driver of “negative performance”. Our sense is that the sell‐off is close to running its course, as the “local curve widening” trend appears to be subsiding, but we are reluctant to step in the way of the broad USD surge.
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Scotiabank