Free Trial

More Optimistic Newsflow Bolsters Domestic Assets

  • More positive news out of Brazil and a stabilisation for risk sentiment has bolstered the Brazilian real on Wednesday ahead of the FOMC minutes later today. Interestingly, USDBRL (-0.33%) has respected an important resistance at 5.0039, the Jun 2 high, a level that has been an important psychological and pivotal mark, dating back to March 2020. Despite the Real trading in line with its Mexican counterpart, it is substantially outperforming the likes of CLP and COP. On the downside, initial support to watch for USDBRL is 4.8762, the 20-day EMA.
  • Similar optimism is being reflected for DI Swap rates with the belly and the long end shifting lower by between 5-10bps, significantly outperforming LatAm peers. The positive developments today in Brazil are highlighted below:
    • House speaker Arthur Lira indicating that the fiscal framework could be voted next Tuesday. Additionally, Valor has reported that Senator Eduardo Braga, rapporteur of the tax reform, said that he intends to present his report to the Senate’s Constitution and Justice Committee on Sept. 27 so the vote can take place on Oct. 4.
    • Governor Campos Neto reiterating that Brazil has opened room for credible rate cuts despite the fight against inflation still not being achieved.
    • Furthermore, although a second-tier measure of inflation, the FGV CPI IPC-S registered below expectations (-0.07% vs. +0.15% estimate).

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.