Summary - Brazil Inflation, New Range For USDMXN

BRAZIL - Plenty of headlines that were interpreted as largely positive. Maia's steadfast tone on reforms have kept the Real buoyant, with local swap rates continuing to fall.

1200GMT/0700ET - IBGE Inflation IPCA m/m Expected 0.78% vs Prior 0.86%, y/y Expected 4.2% vs Prior 3.92%.

• Today's inflation reading will be the final piece of meaningful data before COPOM tomorrow. Expected to breach the 4% level, the print will be closely scrutinised to ascertain the continued persistence of short-term inflationary pressures and their effects for expectations.
• Despite the recent rise, consensus for inflation in 2021 is now at 3.47%, still below the 3.75% target for the year. The consensus for 2022 and 2023 is stable at the center of the targets -- 3.5% and 3.25%, respectively. The recent strengthening of the Real must be noted and may reduce the BCB's inflation forecasts.
• Full COPOM preview will be sent out.

MEXICO - USDMXN, once again, finds itself in another lower 1% range now 19.75-19.95. Small bouts of risk off have not been enough for a short squeeze in the pair, but conversely, with the dollar taking a breather, MXN may find it more difficult to gain momentum.

• Overnight notes regarding the new central bank member Borja reiterate our coverage yesterday. With no body of published work or public record of views on monetary policy or financial issues, added to her time spent at the Treasury, an expectation of relative moderation compared to Guzman can be deduced.