Morgan Stanley Commentary for January 20th, 2016

Early morning buying established a 300 point range on the day in the pre-Americas session, bookends that would allow for no new addition to the collection. A low of 113.60 was set in the opening moments, yet held what is becoming quite an important support level before rallying away in a macro risk-on type of day. Fund selling reemerged near the highs, while industry continued to exhibit their appetite for cover, compounding the action that was brought to attention on the COT. Cecafe released its final December export numbers, coming in at 2.89mio bags of green, a slight decrease of less than 12k bags yoy. An interest rate increase is expected tomorrow from Brazil, with the government pointing to a 25 basis point hike, as opposed to the 50 bps the market had been expecting. With the economy contracting and the IMF lowering expectations overnight, it is not a sure thing that raising rates to combat inflation will be a universally approved of direction. With chances of Dilma being removed from office waning, perhaps tomorrow will be a day when the
BRL takes precedence  on economic matters.