USD/BRL opens markedly higher,.......>

BRAZILIAN REAL: USD/BRL opens markedly higher, pressing BRL to the bottom of the

LatAm FX table Wednesday. Rate continue to trade either side of the 4.00 level,

with today's bout of weakness following particularly poor March economic

activity numbers (both m/m and y/y figures fell well below expectations),

signalling the economic weakness that the central bank flagged earlier in the

week could be more persistent than expected. Any move north of 4.0060 and then

4.0158 would mark the highest USD/BRL's traded since early October last year and

further signs that Q2 could be just as weak as Q1 will help to push out BdB rate

hike expectations (or lack thereof).

-USD/BRL risk reversals continue to move in favour of USD/BRL calls, with the

contract tipping above 2 points today for the fist time since late March. 2.21

points in favour of USD/BRL calls was the recent cycle high.

-Resistance may kick in at the 4.0655 level, marking the 76.4% Fib retracement

of the 4.2146 - 3.5827 move.