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BRL Extending Friday Recovery, Rises 0.92%

LATAM FX
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  • The divergence in regional currencies against the dollar has continued through Friday’s session, with CLP and PEN outperforming on the back of a continued rally in copper, and BRL benefitting from positive news on Petrobras dividends, while MXN has broadly consolidated its weakness amidst the risk-off tone earlier in the session.
    • The further 1.2% gain in copper prices today has buoyed CLP (+1%) and PEN (+0.8%) against the dollar, with the peso also benefitting from the latest BCCh traders survey, which revealed that market participants expect the central bank to slow its easing cycle further to 50bp next month. Over the week, CLP has gained 1.4% against the dollar.
    • Meanwhile, BRL has been supported by reports that Petrobras is leaning toward approving the full payment of its extraordinary dividend in a shareholder meeting next week. USDBRL is currently 0.9% lower on the day, albeit still 1.6% higher on the week due to recent fiscal concerns.
    • By contrast, MXN is 0.7% weaker against the dollar today, extending the loss this week to over 3%. Overnight geopolitical concerns had prompted a sharp underperformance in MXN, which the currency has gradually clawed back through today’s session. As noted, a number of resistance levels have recently been pierced, with attention now on 17.3860, the Jan 17 high. On the downside, initial support lies at 16.7121, the 20-day EMA.
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  • The divergence in regional currencies against the dollar has continued through Friday’s session, with CLP and PEN outperforming on the back of a continued rally in copper, and BRL benefitting from positive news on Petrobras dividends, while MXN has broadly consolidated its weakness amidst the risk-off tone earlier in the session.
    • The further 1.2% gain in copper prices today has buoyed CLP (+1%) and PEN (+0.8%) against the dollar, with the peso also benefitting from the latest BCCh traders survey, which revealed that market participants expect the central bank to slow its easing cycle further to 50bp next month. Over the week, CLP has gained 1.4% against the dollar.
    • Meanwhile, BRL has been supported by reports that Petrobras is leaning toward approving the full payment of its extraordinary dividend in a shareholder meeting next week. USDBRL is currently 0.9% lower on the day, albeit still 1.6% higher on the week due to recent fiscal concerns.
    • By contrast, MXN is 0.7% weaker against the dollar today, extending the loss this week to over 3%. Overnight geopolitical concerns had prompted a sharp underperformance in MXN, which the currency has gradually clawed back through today’s session. As noted, a number of resistance levels have recently been pierced, with attention now on 17.3860, the Jan 17 high. On the downside, initial support lies at 16.7121, the 20-day EMA.