Export volumes helps Colombian peso gains over USD

The Colombian peso rallied 1.2 percent, also benefiting from a recent increase in oil prices that has driven the price of U.S. crude more than 30 percent higher since mid-March. Oil is one of Colombia's main export products. Other Latin American currencies posted gains, with the Mexican peso up 0.8 percent and the Chilean peso climbing 0.6 percent.

We saw earlier the currency of Colombia led gains in Latin American foreign exchange markets on expectations of U.S. policymakers taking action on interest but they may seem taking some time before raising interest rates in the world's largest economy.

Technical and Derivatives watch:

On daily charts of USD/COP we saw a sign of reversal bearish trend as a hammer on downswing occurred with early signals of RSI (14) bouncing and positive crossover on stochastic at around 20 levels.

Hence, with increased export volumes, traders can have productive times in their currency over US$. Using this upswing we recommend add long positions on futures.

Although we see short coverings on USD/MXN, it is not a confirmed signal of bearish reversal trend. So, staying neutral on this pair is a shrewd advice for intraday traders. However, for investors and overseas traders who have their forex exposure in USD are advocated to buy ATM call options as market sense little bullish attitude. Cost of hedging is cheaper for these traders as we are buying At the Money call. The chart shows breakeven point, rate scenarios and corresponding P&L figures.