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BRAZIL: Firmer Equities Lending Support to BRL, June Retail Sales Due

BRAZIL
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  • While the strong topside momentum for global equity benchmarks on Tuesday has not had a huge effect on LatAm currencies, USDBRL price action has tilted bearish, and the pair closed below a notable level of support, the 50-day EMA. The level intersects today at 5.4919 and a clear break would undermine the recent bullish theme, signalling potential for a deeper retracement towards 5.3709, the Jul 11 low.
  • The governor of Brazil's central bank, Roberto Campos Neto, said Tuesday that inflation expectations above the 3% target are a point of concern for the monetary policy committee and recent BCB hawkishness may have underpinned the Real’s recovery. 
  • US inflation data is the focus today, however, Brazil retail sales for June is scheduled, with the annual measure expected to retreat from May’s lofty reading. Data is due at 1300BST0800ET:
    • June Retail Sales Y/y, est. 5.7%, prior 8.1%
    • June Retail Sales M/m, est. -0.2%, prior 1.2%
    • June Retail Sales Broad M/m, est. 1.3%, prior 0.8%
    • June Retail Sales Broad Y/y, est. 3.9%, prior 5.0%
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  • While the strong topside momentum for global equity benchmarks on Tuesday has not had a huge effect on LatAm currencies, USDBRL price action has tilted bearish, and the pair closed below a notable level of support, the 50-day EMA. The level intersects today at 5.4919 and a clear break would undermine the recent bullish theme, signalling potential for a deeper retracement towards 5.3709, the Jul 11 low.
  • The governor of Brazil's central bank, Roberto Campos Neto, said Tuesday that inflation expectations above the 3% target are a point of concern for the monetary policy committee and recent BCB hawkishness may have underpinned the Real’s recovery. 
  • US inflation data is the focus today, however, Brazil retail sales for June is scheduled, with the annual measure expected to retreat from May’s lofty reading. Data is due at 1300BST0800ET:
    • June Retail Sales Y/y, est. 5.7%, prior 8.1%
    • June Retail Sales M/m, est. -0.2%, prior 1.2%
    • June Retail Sales Broad M/m, est. 1.3%, prior 0.8%
    • June Retail Sales Broad Y/y, est. 3.9%, prior 5.0%