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Real Leads Regional Gains - Bullish Technical Developments

BRAZIL
  • BRL led regional gains, firming over 2%. Similarly strong reaction in local swaps with the belly of the DI curve seen up to 25 basis points lower as Brazil markets reopened following the local holiday on Wednesday.
  • Despite fiscal and political risks lurking in the background, resolving the budget gridlock has given the short-term green light for local assets to rally. Noteworthy that a sharp reversal in risk/US equity indices on the Biden headlines late yesterday was unable to trigger any reversal in USDBRL.
  • Recent price action confirms the break of trendline support drawn off the Dec 14 low as well as a bearish triangle breakout, that may signal scope for further Real gains.
  • Economy Minister Guedes in Brasilia (local times):
    • 10:30am: Meets with Special Finance Secretary Waldery Rodrigues
    • 11:30am: Meets with adviser for Strategic Affairs Daniella Marques
    • 3pm: Attends Senate hearing on Mercosur by videoconference

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