USD/BRL gapped higher at the.........>

BRAZILIAN REAL: USD/BRL gapped higher at the Monday open, touching YTD highs of

3.9362, with domestic press reports highlighting the political fracas between

President Bolsonaro and his congress impacting the progress of key pension and

economic reform. The currency's continued sensitivity toward domestic politics

highlights the market's concern over the country's fiscal balance, keeping 3m

implied volatility elevated (lower than only ZAR and TRY among EMFX).

-Moody's wrote earlier today that political tension "undermines pension reform"

and that "uncertainty complicates the approval of the pension reform, a credit

negative development".

-USD/BRL remains wedged between two key technical levels at present: to the

upside, the series of highs printed in December last year (3.9406-3.9450) and

the 200-dma to the downside at 3.8368.