Emerging markets – Forex by Lloyds TSB

Argentinian peso: USD/ARS: Despite the volatility, there is a prospect for a reversal of trend here.The main signal is a break of 3.40.

Latin America and Central America

• Argentinian peso: USD/ARS: Despite the volatility, there is a prospect for a reversal of trend here.The main signal is a break of 3.40. Another re-test of the highs at 3.50 can not be ruled out, but look to sell dollars on this move with stops on a one week close over 3.5050.

• Brazilian real: USD/BRL: The current price action is normally indicative of a reversal pattern, but large price swings make trading difficult at best. Whilst short term attempts can be made to buy the real against 2.40 and 2.42 (as this is the preferred long term view), unless we see a one week close below 2.30 and some equity stability, the market will stay short term orientated.

• Colombian peso: USD/COP: The anticipated head and shoulders top has triggered and although the peso rallied, the prospect of an all out trend has been stopped by broader market jitters. Look for a retracement back towards 2300 where resistance should cap the retracement. However, a one week close over this level would put the 2008 highs back in prospect.

• Chilean peso: USD/CLP: The rally in copper produced the desired currency move here. However, the market concern at present is that this is a short term scenario and hence the peso is starting to ease. Until copper breaches 2008 lows, the bias will remain positive for 600 with 625 a good sell level. Only a one week close over 628 would negate this view.

• Mexican peso: USD/MXN: The Mexican currency is at a critical point. The price action is suggesting a break into 15.00 with Q4 2008 price action taking on the form of a continuation pattern. Whilst this is not the overall favoured view, the bias for now is to buy dollars here and to hold them unless a close below 14.00 occurs.

• Peruvian sol: USD/PEN: Resistance at 3.20 is key. In the short term look for this to cap the dollar’s rise, but further out the trend favours the dollar. Stops are at the buy signal at 3.16.

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