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Summary 1/2 - USDMXN Squeeze, Brazil Fiscal Issues Arise Once More

LATAM

MEXICO - MXN sentiment has certainly shifted as the Senate bill that would make Banxico buy up cash that commercial banks cannot return to the financial system, garners more attention.

  • It was evident yesterday as USDMXN was struggling to follow its LATAM peers and edged closer to 20.00.
  • Overnight we have seen continued demand for the pair, squeezing back to 20.1954. Late November high comes in at 20.2140 with more notable level above at 20.43.

BRAZIL - Brazil faces a 35 billion Reais ($7B) hole in its 2021 budget due to emergency aid payments being held over to next year and welfare benefits indexed to a higher inflation rate than anticipated, a source on the government's economy team said. (RTRS)


Separately, according to the Emergency Bill's Rapporteur *BRAZIL EMERGENCY BILL WON'T BE PRESENTED THIS YEAR *BRAZIL POLITICAL MOMENT FOR BILL TO BE BETTER IN 2021.

  • USDBRL had a big move yesterday, closing down 2.9% at 5.0192, and lowest levels since June. This was a continuation of a slightly hawkish perceived BCB statement and strong retail sales figures confirming a recovery in economic activity.
  • The bounce in USDMXN and stories reiterating further fiscal concerns should work against the Real today.
  • As expected USDBRL is up 0.8% on the open.

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