BRL is starting the week with a strong rally after the BCB decided to rollover all of the US$6.4bn maturing on the 2nd of May. Have in mind that the BCB only has US$17.8bn in FX swap liabilities left and it seems it is not ready to go long USD yet. BRL is stronger by 1.2% at 3.1089 with mixed global backdrop. We believe that the adjustment is down and now the currency should trade at 3.10/14 range for the remainder of the week. Early data on inflation and economic activity sent contradictory signals for monetary policy with strong fall in wholesale inflation and much higher than expected economic activity data. We may see a more nuanced guidance in coming weeks ahead of next Copom meeting (31st May).
In the fixed income market we are seeing lower DI rates, following BRL gains with Jan down 4bps to 9.61% and Jan 21 down 5bp to 9.90%. The market is now looking for a 102bp cut in May.
NO more significant data in the domestic market and in the US the Empire State manufacturing and NAHB homebuilders surveys are both on Monday (both were strong in March), with February TICS data later.