BRAZIL: Softer Dollar and Higher Crude Prices Underpin BRL
* The Brazilian real has seen some significant swings today following the presentation of the 2026...
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USD: Dollar Dips, Undermined by Oil, Yields
In tandem with the slip to new daily lows for the US 10yr yield, the greenback is extending weakness in recent trade - putting EUR/USD, GBP/USD at fresh daily highs. We noted markets taking out soft resistance into 1.0912 earlier today, and this exposes the bull trigger at 1.0947, the next major upside level for the pair.
- Higher oil prices, lower yields are certainly weighing on the USD here - in turn triggered by Trump's more aggressive language on Iran - adding an additional geopolitical premium to the latest turn against the greenback.
- Despite a generally quieter session in terms of headlines, volumes have been very healthy - contrasting with this point last week. EUR futures have traded close to 70% more in volumes relative to the average for this time of day - making for a busy start to the week.
STIR: Flat Day For BoE Pricing, Just Under 55bp Of Cuts Priced Through Dec
A fairly rangebound session for GBP STIRs, given the backloaded nature of UK risk events this week.
- The latest drift higher in core global FI markets provides a modest dovish feel for the UK short end.
- SONIA futures little changed to +5.5.
- BoE-dated OIS shows ~54bp of cuts through year-end, ’25 meeting pricing within 1bp of Friday’s closing levels.
| BoE Meeting | SONIA BoE-Dated OIS (%) | Difference vs. Current Effective SONIA Rate (bp) |
| Mar-25 | 4.459 | +0.3 |
| May-25 | 4.272 | -18.3 |
| Jun-25 | 4.223 | -23.2 |
| Aug-25 | 4.085 | -37.1 |
| Sep-25 | 4.038 | -41.8 |
| Nov-25 | 3.941 | -51.4 |
| Dec-25 | 3.914 | -54.1 |
GILTS: Futures Through Initial Resistance
The latest rally in core global FI markets has taken gilt futures through initial resistance at the 20-day EMA (92.28). The previously detailed increase in tensions between the U.S. & Yemen/Iran factors into recent trade.
- Contract trades as high as 92.37, with key resistance located at the Mar 7 high (92.63). A break above there would increase risks to the bearish technical picture.
- Yields 0.5-6.5bp lower, curve flatter
- Underperformance vs. Bunds wanes a little, leaving last week’s closing high in the 10-Year spread intact, spread now ~2.5bp wider on the day around 182bp.
