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USDBRL Confirms Resumption of Uptrend

  • The break of the 5.3130 hurdle in USDBRL is a clear bullish development. Additionally, closing above the May 24 high of 5.3740 may signal further gains in the pipeline, especially with the current bearish tone for risk overnight.
  • The most notable levels on the topside are the May highs of 5.4837, with stronger resistance in the form of the 61.8% retracement of the 2021 high/low swing that comes in at 5.5000. Initial support is now 5.3130.
  • Political noise persists with latest comments from the deputy lower house speaker, Marcelo Ramos, who said an income tax reform that introduces a 20% tax on company dividends is unlikely to pass because most Brazilians oppose it, even businesses.
  • Eurasia Group also downgraded the country's long-term trajectory to negative from neutral, citing renewed fiscal concerns and persistent inflation are undermining prospects for 2022 economic growth. The group expects the quality of the economic agenda in Congress to deteriorate going forward.
  • Today, central bank president Roberto Campos Neto offers speech during Council of Americas virtual event at 11am Brasilia time.
  • Treasury auctions fixed-rate LTN local notes due 2022, 2023 and 2025; fixed-rate NTN-F local notes due 2027 and 2031; and Selic-linked LFT notes due 2023 and 2027.


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