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BRL Fades 1% Amid Broad Dollar Strength

LATAM FX
  • The Brazilian real is the weakest in the region today amid broad dollar strength following the US retail sales report as well as weakness in the commodity space.
    • Particular weakness in iron ore futures weighing on the local currency and oil retreating from its best levels.
    • Most recent commentary from lower house speaker Lira relating to the precatorios issue not being resolved next week potentially adding fuel to the fiscal uncertainty fire.
  • As expected, more subdued price action for MXN given recent dynamics as well as the local holiday. 19.85 holds again on the downside but with 50 and 100-day moving averages coming around the 20.00 mark, USDMXN bulls will require a more sustained bounce than the 0.3% seen so far on Thursday.
  • USDCLP matched yesterday's lows at 777.50 and has enjoyed a small rally in line with greenback strength.
    • With an extremely light data calendar for all of next week, expect the price action to be led by broader themes as well as headlines concerning upcoming elections and the fourth pension withdrawal.
    • As a reminder the Lower House's constitution commission will vote on each article of the bills for a fourth round of pension withdrawals on September 22.

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