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USDBRL Extending Losses, Still Above Initial Support

BRAZIL
  • USDBRL is extending lower following recent comments from President Lula and Finance Minister Haddad, taking the pullback today to 2.1%. Despite this move, the pair remains above initial support at 5.4591, the 20-day EMA. Meanwhile, DI swap rates have rallied notably, with front-end yields around 18bp lower on the day.
  • In his remarks earlier, Lula said that his government sees fiscal responsibility as a commitment. Meanwhile, Haddad said that the central bank has the autonomy to act as it sees fit, saying that the FX rate will settle down given all the initiatives the government is taking. Haddad declined to comment on any measures to curb government spending that may be discussed with President Lula at the ministerial meeting, which as a reminder is scheduled for 2030BST(1530ET) today.

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