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BRL Resilient To Brief Bout of Greenback Strength

BRAZIL
  • Broad USD strength in the aftermath of the US data is abating in recent minutes, with USDBRL (-0.35) having fully reversed a brief recovery to trade at fresh session lows of 4.8592. Most LatAm currencies are showing resilience to the stubborn US figures and BRL and CLP are outperforming.
  • The Brazilian real is perhaps being underpinned by the stronger-than-expected IPCA inflation data this morning, which prompted some analysts to caution against the ongoing challenges confronting the BCB’s plans to gradually relax monetary policy. With this in mind, the trend condition in USDBRL remains bearish and recent short-term gains are considered corrective. A resumption of weakness would refocus attention on support at 4.8032, the Dec 27 low. Clearance of this level would signal scope for a move towards 4.6964, the Jul 28 low.

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