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Sharp USDBRL Weakness Through 5.00 Proves Short-Lived

BRAZIL
  • A weaker greenback and more hawkish than expected Copom statement contributed to some sharp USDBRL declines at yesterday’s open. The pair pierced an important support at 5.0108, the Aug 29/30 low and extended below the 5 handle to print 4.9410 lows. However, the overall turnaround in greenback sentiment saw the pair reverse substantially and close around the unchanged mark at 5.0436.
    • Interestingly, President Lula, in a message to the national congress, said that reducing the volatility of the Brazilian currency through an FX policy can also help mitigating the inflationary impacts of changes in the external scenario.
  • Brazilian Statistics Institute unveils the industrial production data for December at 1200GMT/0700ET. S&P January PMIs are due an hour later.
    • Dec. Industrial Production YoY, est. -1.2%, prior 0.9%
    • Dec. Industrial Production MoM, est. 0%, prior -0.1%
    • Jan. S&P Global Brazil Composite PM, prior 49.1
    • Jan. S&P Global Brazil Services PMI, prior 51.0

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