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Tonight the BCB is widely expected to CUT....>

BRAZIL
BRAZIL: Tonight the BCB is widely expected to CUT its Selic Rate by 50 bps from
5% to 4.50%. The main question most are looking out, is how dovish will the
outlook be?
- The outlook for the BRL remains tilted to the downside despite the decent
pullback from the 4.2770 high in USDBRL achieved on 26/11, until growth
conditions improve and the risk of Latin America contagion from the likes of
Chile. Further out, looking at rate outlook, there is still a risk of further
cuts, not yet priced by the market, with only a 50% chance of an additional cut
by February.
- Technically, looks like USDBRL could extend towards the lower gap at
4.1091-4.1010.

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