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BRL Back In Favour Amid Greenback Weakness

BRAZIL
  • BRL led global gains following Chair Powell's press conference rising around 1.6% off its worst levels. USDBRL printed 5.1915 and following some slightly more dovish commentary and the ensuing greenback sell-off, the pair closed the gap to the Jun 16 close at 5.1152.
    • The BOVESPA Index rallied 1.34% yesterday to 126285.6. This represented the largest one day point and percentage gain since Monday, posting gains in five of the past seven trading sessions.
  • Positive performance for BRL is likely to extend as the overnight session was characterised by prolonged dollar weakness, however US GDP data will likely denote the direction for risk on Thursday.
    • Swap rates could potentially be impacted by the softer readings in IGP inflation data.
    • Treasury may also be a potential driver to swap traders amid offer of fixed-rate bonds maturing in 2022, 2023, 2025, 2027 and 2031; size on each maturity to be announced near 0930 ET.
  • Economy Ministry to release June Central Govt Budget data at 3pm (Brasilia time), followed by Treasury Secretary Jeferson Bittencourt press conference.

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