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Summary 1/2 - USDMXN Breaks Support, Brazil Assets Continue To Climb

LATAM

MEXICO - USDMXN finally gets the close sub 19.95 and is slowly grinding lower amid positive risk sentiment and a lower DXY. Global factors will continue to be main driver today with very light domestic data calendar.

  • Overnight, S&P held Mexico's rating at BBB (negative outlook).
  • Today a new female Deputy CB Gov is due to be announced.

BRAZIL - Local swap rates continued to fall in a week that has seen success of bond sales in both Reais and Usds signaling that demand for risky assets may be sustained despite the ever-present fiscal risks. Curve bull flattened yesterday with 10-year swap rates down another 35 bps.

  • USDBRL consistent grind lower yesterday to lows of 5.1220. We did see a brief spike just before the close up to 5.18 before closing at 5.16.
  • There was a headline from Guedes: BRAZIL GOVT TALKS W/ CONGRESS ON TAX REFORM HALTED. While there was no immediate reaction, this may have prompted a bit of profit taking into the close.

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