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Finance Minister Haddad Says FX Intervention Up To The BCB

BRAZIL
  • Amidst further strength in the greenback yesterday and continued pressure on the Brazilian real, Finance Minister Haddad said that the rise in the US dollar is due to noise and intervention in the FX market is up to the central bank. Haddad said that his economic team is working on a very sustainable budget for 2025 that will target a zero deficit and that a budget freeze will be necessary to achieve the fiscal goals.
  • Despite his comments, USDBRL continued to climb through yesterday’s session, rising above resistance at 5.6428, the 1.236 projection of the Dec 27 ‘23 - Apr 16 - May 3 price swing, to close at 5.66. Above here, attention turns to multiple highs around the 5.75 mark. Meanwhile, front end DI swap rates rose by a further 20bp yesterday, taking gains over the last month towards 100bp, as the market now prices in policy rate hikes later this year.
  • Today, BCB president Campos Neto is due to speak at an ECB forum on central banking in Sintra, Portugal, alongside the Fed's Powell and ECB's Lagarde from 1430BST(0930ET). No further macro data are due, following the earlier FIPE monthly CPI, which rose by 0.26% m/m in June (vs. +0.09% in May). Attention turns to May industrial production data, due tomorrow.

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