• Weekly outlook for USD/COP

    Source: FxWire Pro - Commentary / 08 Dec 2014 01:04:01   America/New_York

    Quotes from Scotiabank:

    -This week's main event is likely to be the release of BanRep's MPC meeting minutes. On the monetary policy front, our sense is that the central bank is now in "neutral territory", and we expect the minutes to confirm this view. For down the line,we see risks that the drop in oil prices, as well as the weakening of COP, will dampen the country's growth, and put the central bank back in easing mode later on, although the Fed's policy stance shift is a risk that could derail this prospect.

    -For the coming few months, we expect BanRep to signal a pause. What we will be more interested in, is the central bank's views on the peso. FinMin Cardenas has signaled that he views the peso as fairly valued at this levels, and seemed relatively comfortable with the depreciation.

    -It will be interesting to see if that view is widely held by the central bank, as well as whether somesconcerns are present over the speed with which the adjustment has taken place.  Our sense is that the move in USD/COP has been somewhat overdone for the near term (barring another leg down in oil prices), but we are wary of catching falling knives.

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