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BRAZIL: USDBRL Rises 0.9% As Fiscal Concerns Mount Again

BRAZIL
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  • The Brazilian real remains under pressure today, following the disappointing bi-monthly fiscal report on Friday, in which the government reduced the size of its budget freeze for this year and allowed for additional expenditure. Officials are due to hold a press conference shortly to discuss the bimonthly report.
    • USDBRL rose by 1.5% on the open to a high of 5.5971, before paring gains, with the pair currently 0.9% higher on the day at 5.56. The move has further narrowed the gap to resistance at 5.6917, the Aug 30 high and a bull trigger.
    • Meanwhile, DI swap rates have risen another 10bp in the belly of the curve, taking the move over the last week to around 50bp, amidst the renewed fiscal concerns and following a further increase in year-end Selic rate expectations in today’s Focus survey.
    • Looking ahead, attention turns to tomorrow’s Copom minutes, followed by mid-month IPCA inflation data on Wednesday. The BCB is then due to publish its quarterly inflation report on Thursday.
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  • The Brazilian real remains under pressure today, following the disappointing bi-monthly fiscal report on Friday, in which the government reduced the size of its budget freeze for this year and allowed for additional expenditure. Officials are due to hold a press conference shortly to discuss the bimonthly report.
    • USDBRL rose by 1.5% on the open to a high of 5.5971, before paring gains, with the pair currently 0.9% higher on the day at 5.56. The move has further narrowed the gap to resistance at 5.6917, the Aug 30 high and a bull trigger.
    • Meanwhile, DI swap rates have risen another 10bp in the belly of the curve, taking the move over the last week to around 50bp, amidst the renewed fiscal concerns and following a further increase in year-end Selic rate expectations in today’s Focus survey.
    • Looking ahead, attention turns to tomorrow’s Copom minutes, followed by mid-month IPCA inflation data on Wednesday. The BCB is then due to publish its quarterly inflation report on Thursday.