Real Weakens With IGP-M Inflation Data Under Microscope

USD/BRL has ticked higher and last trades +120 pips at BRL4.9630 as the BRL underperforms the greenback alongside MXN and ARS even as the BBDXY index remains below neutral levels. Bulls look to force a break above the 50-EMA, which kicks in at BRL5.0805. Bears keep an eye on the 76.4% retracement of the May - Nov 2022 bull phase at BRL4.8889.

• Brazil's IGP-M inflation printed at -2.57% Y/Y in April versus -2.61% expected and -1.16% in March. Separately, Brazilian economists in the central bank's weekly survey cut their 2023 CPI inflation outlook to +6.02% Y/Y from +6.05%. The data came out amid the ongoing debate on whether the central bank could cut rates at its next monetary policy meetings on June 21. President Luiz Inacio Lula da Silva said over the weekend that "Brazilian retailers, businesspeople, workers no longer stand this interest rate" as he renewed his criticism of elevated borrowing costs.