BRAZIL: DI Rates Open Higher Tracking USD After U.S. And EU Draft Trade Deal

(RTTNews) - The one-day interbank deposit futures rates (DI rates) in Brazil opened higher, tracking the locally traded U.S. Dollar, which was trading higher after the draft deal between the United States and the European Commission Presidents, Donald Trump and Jean-Claude Juncker, respectively, to remove trade barriers to industrial goods, dissipating fears of a trade war between the country and the bloc.

Renascenia Corretora's economic team bet that the curve should have few variations throughout the session, leaning on the greenback's movement. "Abroad, the market is relatively quieter regarding the trade war," Renascenia's team wrote in a report.

Analysts also point out that the rise in rates may be a correction after two consecutive sessions in which the locally traded U.S. dollar fell.

The Brazilian political scenario, however, remains the main factor behind the interest rate movement, with the market awaiting the decision on who will run alongside PSDB's Geraldo Alckmin for President. Earlier, centrist parties closed a deal to support Alckmin's presidential bid.

Near the middle of the session, the January 2019 DI contract rate was at 6.645%, from 6.625% in the previous settlement, while the January 2020 DI rate was at 7.95%, from 7.93%. The January 2021 DI contract rate was at 8.99%, from 8.94%.