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Lula In China, USDBRL Bear Cycle Extends

BRAZIL
  • President Luiz Inacio Lula da Silva has meetings in Shanghai, China. Lula is scheduled to first attend Dilma Rousseff swearing-in ceremony as BRICS’s New Development Bank President. He will then make a visit to Huawei plant, followed by a meeting with BYD CEO Wang Chuanfu. Lula then travels to Beijing by the end of the day.
  • Central bank governor Roberto Campos Neto told investors he was encouraged by this week’s inflation print but wants to see a downward trend before altering course, according to three people familiar with the conversations. Campos Neto reiterated that policymakers are waiting for long-term inflation expectations to fall before they begin to ease policy.
  • USDBRL not only extended below the 5.00 mark on Wednesday, but the pair also breached and closed below the 2023 lows. This places USDBRL at fresh 10-month lows and reiterates the bearish technical outlook. Price action opens up the potential for a move towards the May 2022 lows at 4.6910.

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