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BRL Firmer At Open On Bolstered Risk Sentiment

BRAZIL
  • Firmer stocks and rising commodities have underpinned the Brazilian Real at the open. USDBRL retreats to 5.5350, down 0.57%. With limited domestic data until next Wednesday’s mid-month IPCA inflation data, global drivers and political headlines will continue to drive local assets.
    • In general, USDBRL has remained broadly unchanged for 2022 and continues to respect the 5.50-5.75 short-term range. The potential for volatility to increase rises with Fed next week and congress returning on February 1st.
  • Public sector workers in Brazil staged a partial strike yesterday after President Bolsonaro refused pay rises to non-security public employees.
    • The stoppage was only for two hours on Tuesday but there are plans for significant strike action in February across the public sector if Bolsonaro signs the federal budget into law which is expected by Friday.
  • As former President Luiz Inacio Lula da Silva is leading every poll and shows strong chances of winning in the first round, markets continue to prepare for how President Bolsonaro plans to improve his chances.
    • CNN reported that Bolsonaro’s allies are requesting the president to adopt a more moderate tone
  • Brazilian President Jair Bolsonaro will visit Suriname and Guyana on Thursday and Friday for talks on economic cooperation following recent discoveries of oil and gas by Brazil's two neighbours, the foreign ministry said on Monday.

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