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Real Surges 2%, USDBRL Closes Below Significant Moving Averages

BRAZIL
  • USDBRL had a limited reaction to the release of yesterday's FOMC announcement, however, was happy to participate in the subsequent dollar selloff. The Real enjoyed near 2% gains as breaks below the 100 and 200-day moving averages were confirmed. The February lows at 5.3050 now come into focus.
  • Released this morning:
    • Brazil's April IGP-M Inflation Index 1.51% M/m; Est. 1.34%
      • Brazil's April IGP-M Inflation Index 32.02% Y/y; Est. 31.80%
  • Despite mid-month IPCA inflation printing marginally below estimates, the continued upward pressure should provide Copom (May 5th) with confirmation that another 75 basis points hike is necessary.

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