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BRAZIL: DI Swap Rates Rally As Haddad Says Spending Cut Plan Very Advanced

BRAZIL
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  • DI swap rates remain ~25bp lower on the day in the belly and long-end of the curve, amid comments earlier from Finance Minister Haddad that spending cuts plans are very advanced and may be released this week. Haddad said he would discuss the plan with President Lula today. USDBRL also remains 1.6% lower on the day at 5.77, unwinding Friday’s gain, which had seen the highest ever weekly close for the pair.
  • As noted earlier, resistance for USDBRL at 5.8551, the Aug 5 high has been pierced. A clear break would open 5.9054, the 1.618 projection of the Aug 19 - 30 - Sep 19 price swing. Initial firm support lies at 5.6070, the 50-day EMA.
  • Attention turns to Wednesday’s Copom meeting, when the central bank is expected to deliver a larger 50bp Selic rate hike to 11.25%. A full MNI preview, with analyst views, will be published tomorrow.
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  • DI swap rates remain ~25bp lower on the day in the belly and long-end of the curve, amid comments earlier from Finance Minister Haddad that spending cuts plans are very advanced and may be released this week. Haddad said he would discuss the plan with President Lula today. USDBRL also remains 1.6% lower on the day at 5.77, unwinding Friday’s gain, which had seen the highest ever weekly close for the pair.
  • As noted earlier, resistance for USDBRL at 5.8551, the Aug 5 high has been pierced. A clear break would open 5.9054, the 1.618 projection of the Aug 19 - 30 - Sep 19 price swing. Initial firm support lies at 5.6070, the 50-day EMA.
  • Attention turns to Wednesday’s Copom meeting, when the central bank is expected to deliver a larger 50bp Selic rate hike to 11.25%. A full MNI preview, with analyst views, will be published tomorrow.