MXN: Banxico minutes not estimated to bring in any news as the recent rout in global markets has weighed in Mexican assets. MXN has underperformed its EM peers as risk sentiment deteriorates. Despite the recent volatility and weakness in the exchange rate, we believe that Banxico will more likely follow the Fed one-by-one instead of delivering pre-emptive hikes.

Meanwhile, stay hedged with FX market uncertainty via bear put spreads. We advocate to go long in 1W (0.5%) Out of the money delta put while shorting 3D (0.5%) in the money put.

The fall in MXN has been driven by low oil prices and the concerns this raises about PEMEX. As was highlighted by Banxico in the statement after the January meeting, financial stability concerns should be addressed from the fiscal, not the monetary, side. We believe the Banxico minutes, to be released on Thursday, will reiterate this view, while hinting at the possibility of pre-emptive hikes only if the peso continues to weaken in a significant manner.

COP: In Colombia, the expectation from Banrep to hike 50 bps on increasing inflation is keeping its upward trend in Colombia, reaching 7.45% YoY in January, which is well beyond Banrep's 2-4% target range. Although prices are being mainly driven higher by food inflation, which should subdue by midyear, non-food inflation and core inflation are accelerating, amid signals that inflation expectations are de-anchoring.

Furthermore, the delay in the presentation of the tax reform before Congress puts additional pressure for Banrep to frontload its tightening. As such, we expect Banrep to increase its reference rate this Friday by 50bp to 6.50% (vs. consensus 6.25%) to anchor inflation expectations, and we anticipate the rate to reach 7% by mid-2016.

BRL: Technically, USDBRL showing more upside potential even though it has been losing upswings momentum as the rejection of resistance at 4.0180 levels but intraday swings has cleared 21DMA mark even though the bears began pushing downwards, in between a hanging man patterns are formed on rallies to show indecision in previous upswings, leading oscillators are also converging these price upswings but slightly narrowed curve indicates reduced momentum. We now keep an eye on decisive breach resistance at 4.0169 levels.

Since we project the USDBRL outlook to reach 4.0 by year-end and 4.5 in 2016, the recommendation is to go long in 1W ATM delta call,  1M (1%) OTM call and simultaneously short 4D 1 lot of (1%) ITM call in the ratio of 2:1.

The lower strike short calls to reduce the cost, this would help in purchasing of the greater number of long calls (ATM calls are overpriced, so we chose 1% OTM calls as they have lesser delta but more upside potential in underlying pair) and the position is entered for no cost or a net credit.