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USDBRL Set To Strengthen, Copom Meeting Wednesday

BRAZIL
  • The Brazilian Real will likely come under significant pressure at the open amid the surging dollar and sustained selling across major equity benchmarks. Given the relative weakness of MXN to the EM currency basket, USDBRL will likely bridge the gap to the May 16 close at 5.0609, opening the potential for a move to the May highs at 5.2090.
  • The majority of analysts are expecting a 50bp hike of the Selic rate at Wednesday’s Copom meeting, however, the guidance will be in focus regarding the potential for any further potential tightening from the BCB.
  • President Bolsonaro asked US President Joe Biden for help in his re-election bid during a private meeting on the sidelines of a regional summit this week, portraying his leftist opponent as a danger to US interests, according to people familiar with the matter.
    • Latest polling data from BTG/FSB released this morning shows Lula Has 44%, Bolsonaro 32% in Brazil first round election.
    • -Difference between voting intentions is 12 points, compared to 14 points in previous Instituto FSB Pesquisa survey published by BTG Pactual. In a simulated runoff scenario, Lula appears with the same 54% of previous poll, while Bolsonaro fluctuated to 36% from 35%.
  • Trade Balance Data for May will be published by the Economy Ministry at 1900BST/1400ET:
    • Trade Balance Monthly, est. $4.5b, prior $8.15b, revised $8.09b
    • Imports Total, est. $24.8b, prior $20.8b, revised $20.8b
    • Exports Total, est. $29.4b, prior $28.9b, revised $28.8b
  • Eletrobras’s newly-issued shares are set to begin trading on Brazil’s stock exchange B3 after a massive equity deal that raised about 33.7b reais and led to the privatization of the Brazilian power firm.
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