BRAZIL: DI Rates Close Lower Tracking USD, Foreign Markets

(RTTNews) - The one-day interbank deposit futures rates (DI rates) in Brazil ended lower Tuesday, tracking the locally traded U.S. dollar, which fell by more than 1% against the Brazilian real in a post-holiday adjustment. The forward curve ignored the country's political news, amid the weakest economic agenda of the day.

With this move, the forward curve began to price the odds of maintenance of the Selic rates at the Central Bank's Monetary Policy Committee (Copom) meeting that will take place later this month, from the odds of a 0.25 percentage points (pp) increase that prevailed until the end of last week.

"The Copom may change the tone at the next meeting, but it should not touch the Selic," said a trader, adding that the language of the monetary authority should depend on upcoming activity data. For Bradesco, this week's release of retail sales results and service volume in May should allow a more complete assessment of the impact of the trucker's strike on the domestic economy.

The January 2019 DI contract rate closed at 6.795%, from 6.82% in the previous settlement, while the January 2020 DI rate settled at 8.12%, from 8.25%. The January 2021 DI contract rate ended at 9.09%, from 9.25%.