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BRL Snaps 8 Day Losing Streak, Firms around 1.6%

BRAZIL
  • BRL had a very strong session yesterday, firming roughly 1.6% after 8 consecutive days of retreat. Despite this, the political backdrop appeared to deteriorate as President Bolsonaro's remarks about elections generated friction with Supreme Court and Congress.
  • Interestingly, according to B3 data, foreigners were not part of the force driving the currency down in recent weeks which may encourage bulls to reclaim the spotlight as more aggressive rate hikes appear imminent.
  • Additionally, the intervention from the central bank as USDBRL edged above 5.30 may also provide comfort for market participants looking to reinitiate BRL longs.
  • Minor dollar strength overnight may cap any further immediate gains as the focus turns to the US CPI report for June.

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