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BRAZIL: Brazilian Real Consolidating 1.1% Gains Post-Open

BRAZIL
BulletEM BulletEmerging Market News
  • Reaction to the hawkish Copom decision, aggressive guidance and the announcement of the spot dollar auction has been supportive of the Brazilian real at the open, extending its recovery this week to around 3.5% against the dollar. USDBRL now trades back below the 5.90 mark, as we await the credit line auction of up to $4 billion to try to supply liquidity to the spot market.
  • The DI swaps curve has increased its inversion with Jan ’26 DI’s shifting around 25bps higher to reflect the hawkish move, but greater optimism being felt further along the curve. Yields on Jan ‘33s are down 21 bps to 13.4%, with the re-introduction of forward guidance ahead of Director Galipolo taking the helm providing markets with a firm sense of continuity and commitment under its new leadership.
  • For USDBRL, initial price action shows a clean break of the 20-day EMA. Below here, the November 27 lows and the 50-day average reside close to 5.80.
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  • Reaction to the hawkish Copom decision, aggressive guidance and the announcement of the spot dollar auction has been supportive of the Brazilian real at the open, extending its recovery this week to around 3.5% against the dollar. USDBRL now trades back below the 5.90 mark, as we await the credit line auction of up to $4 billion to try to supply liquidity to the spot market.
  • The DI swaps curve has increased its inversion with Jan ’26 DI’s shifting around 25bps higher to reflect the hawkish move, but greater optimism being felt further along the curve. Yields on Jan ‘33s are down 21 bps to 13.4%, with the re-introduction of forward guidance ahead of Director Galipolo taking the helm providing markets with a firm sense of continuity and commitment under its new leadership.
  • For USDBRL, initial price action shows a clean break of the 20-day EMA. Below here, the November 27 lows and the 50-day average reside close to 5.80.