EUR/USD, EUR/JPY, EUR/CHF flows - Big Brazil moves, just a slight $ bid elsewhere

The threatened kneejerk step re-pricing for Brazil kicking in on the back of the surprise election result and victory for Lula over the market-favoured Bolsonaro. Resets see USD/BRL gap to reverse the full YTD gains to 5.6~, up over 10%, with limit down on equities too.

For wider markets, more interesting question is whether this stays fully idiosyncratic or sees any ripple effects at all. No signs of carry type spillover onto either other carries or other funders (JPY and CHF both still off today). But maybe just a touch of the action being with the grain of the day’s dollar demand and marginal better bid? That, in truth, was in place anyway and more led in fact by the slightly better US risk tone and higher yield on the day. For now then, mainly just its ‘own thing’, and a busy week for central bank meetings, along with ongoing monitoring of the tech and France tone look set to dominate.