Summary 1/2 - Banxico, BCB Revises 2020 Inflation and GDP

MEXICO - Continued support for the MXN was seen yesterday following the postponement of the Banxico Bill. Another leg lower in the USD following the FOMC and USDMXN finds itself within striking range of double bottom support at 19.70.

• BANXICO is the main event this evening at 1900GMT/1400ET where we expect rate unchanged at 4.25%. Full preview was sent out yesterday, however if you would like it sent again, please let me know.
• The Federal Reserve on Wednesday announced the extension of its temporary U.S. dollar liquidity swap lines through September 30, 2021, which affects both Banco De Mexico and the Banco Central do Brasil.

BRAZIL - Brazil Central Bank revises up this year's inflation (as expected) and GDP in the Quarterly Inflation report:

• BCB upgrades 2020 gdp to -4.4%, from -5%.
• BCB sees 2021 gdp slightly lower at +3.8%; was +3.9% before.
• BCB sees 2020 inflation at 4.3% and both 2021/2022 inflation at 3.4%
• BCB: uncertainty on activity still above normal

Deterioration of the fiscal outlook and political noise hindered the performance of local assets in yesterday's session. A move was seen in swap rates, which rose 8-11bps for tenors above 2 years, giving back the prior days gains. USDBRL had another test above 513 but then sold off into the close with 5.00 still the notable level to the downside.