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BRL outperforms Ahead Of Copom Decision, DI Curve Rallies

LATAM
  • Another expected rate hike from the BCB and stronger commodity prices keeping BRL (+1.2%) well supported on Wednesday amid local holidays for regional peers.
  • Additionally, the announcement of the precatorios bill later today appears to be welcomed by swap rates, seen between 16-25bps lower on the day.
  • USDMXN has breached key support and the Peso appears underpinned as risk consolidates at stronger levels. Any further upward shocks in tomorrow’s CPI data may stoke the debate on whether to accelerate the pace of Banxico rate hikes.
    • USDMXN down 0.34% at 20.9609
    • USDBRL down 1.2% at 5.5426
    • BBG Dollar Index down 0.2% at 1180.53
    • USDCNH down 0.46% at 6.3349
    • JPMorgan EM Ccy Index up 0.32% at 52.521
    • BBG Commodity Index up 0.5934 points (0.61%) at 97.2861
    • WTI Crude Oil (front-month) up $0.4 (0.56%) at $72.44
  • Brazil DI Swaps:
    • Jan '23 -16 bps at 11.32%
    • Jan '26 -25 bps at 10.53%
    • Jan '31 -24 bps at 10.71%

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