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

BRAZILIAN REAL: USD/BRL gapped higher at the open Wednesday, briefly trading

north of 3.92 with vols elevated across the curve (1w vols the sole exception)

as market focus turns to a the Congress vote held on a bill that has stripped

Bolsonaro of power and oversight over budget measures, reducing the likelihood

of critical market-friendly pension reforms. The uncertainty is also clearly

showing in Brazilian equities, with the Ibovespa index down over 5% from March's

best levels (although Brazilian stocks trimmed some of the losses in the Tuesday

session).

-There remains significant option expiry interest this Friday (month-, quarter-,

fiscal year end) that may limit further moves in spot, with well over $15bln

rolling off between 3.60-3.90 at the NY cut.

-USD/BRL has now closed above the 200-dma (3.8377) for four consecutive sessions

and BRL bulls will need to recover below here to regain firmer footing.