Published at 15:34 (GMT) 20 Oct

AUDUSD

COP FX continues its free fall, currently trading down 2.54% to 1918.90, and beginning to grind on technical resistance at 1910-1920 (but this is relatively weak). The market is very jittery on the expectation of an FX intervention at this Friday's Banrep MPC. This is further amplified by Brazil's IOF announcement, which introduces policy risk in Colombia regarding COP FX appreciation. This is minimal, since most inflows are FDI, not FPI, and most FPI is long-term not short-term. But, given the severity of Brazilian measures, the market fears a heavy FX intervention by Banrep, with chatter including US$50mn per day with partial sterilisation. We believe Banrep is more cautious and will be more conservative. But regardless, FX interventions represent an initial correction of 10-15% from the bottom in s/t or a 5-d outlook for 2000-2085.