COP: Shaping Up For Further Strength

The Colombian peso managed to push through key resistance at COP2,000/US$ on July 21, capping off 23% of gains since hitting the 2009 low of COP2,609/US$ in early March. While momentum indicators show the unit is looking overcooked, suggesting we could see a retest (to the downside) of the COP2,000/US$ level, the technical break is a positive signal, in our view. We hold from taking an outright bullish stance towards the peso until a breach of this level is confirmed over the next few days trading, but if this level does hold we anticipate more appreciation in the short-term.

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