MARKETS: DI rates close lower amid correction before major survey

São Paulo, 14 - The one-day interbank deposit futures rates (DI rates) in Brazil ended lower amid a correction movement just one day after the locally traded U.S. dollar hit its record closing...

São Paulo, 14 - The one-day interbank deposit futures rates (DI rates) in Brazil ended lower amid a correction movement just one day after the locally traded U.S. dollar hit its record closing level against the Brazilian real. Investors adjust positions amid expectations related to the Datafolha voting intention survey expected for tonight. The shortest stretch of the forward curve closed slightly higher, under the influence of the Brazilian Central Bank board's meeting next week. Derivatives traders said that the move in the forward curve is an "adjustment to yesterday's high." "Investors are also zeroing positions waiting for the survey today," said one trader, referring to Datafolha. Another added that business liquidity is low. "The market is focused on politics and the scenario is undefined," he says. But Edward Glossop, the economist for Latin America at Capital Economics (CE), estimates that the electoral race begins to take shape, albeit slowly, with less than a month remaining for the first round. "(Jair) Bolsonaro seems increasingly likely to make the second round, but it is still unclear who he would face," he says in a report. With less than a month to go, Brazil's election race is slowly starting to take shape. The far-right candidate Jair "Bolsonaro looks increasingly likely to make the second round of the vote. But it's still unclear who he would face in the run-off", he noted. "Regardless of who wins, we think the prospects for fiscal and structural reforms are pretty bleak. The scale of the challenge the victor will face means that even a market-friendly president won't be able to stabilize the public finances and boost potential growth significantly," he concluded. The January 2019 DI contract rate closed at 6.870%, from 6.865% in the previous settlement, while the January 2020 DI rate was at 8.64%, from 8.66%. The January 2021 DI contract rate settled at 9.92%, from 10.00%. Olívia Bulla / Agência CMA Translation by Ricardo Gozzi http://www.agenciacma.com.br/esp/



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MARKETS: DI rates close lower amid correction before major survey

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