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USDBRL Hovers Above 5.20, Focus On GDP

BRAZIL
  • Despite the holiday markets, USDBRL had a fairly volatile session with a greater than 1% trading range. The local currency recovered following some early weakness and closed just above previously tested horizontal support around 5.20. A potential break may target the 2021 lows at 5.1210, with today's focus on GDP figures.
  • The BCB's activity indicator posted strong 2.3% quarter-on-quarter, 2.3% year-on-year growth in the first quarter. Although the index correlates well with the official GDP reading, it is imperfect and there may be sizable differences -- especially in the quarter-on-quarter reading -- due to seasonal adjustment. Those issues are behind the large dispersion in forecasts for the first quarter.

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