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After a few days of peak risk aversion following the start of the conflict between the US and Iran, this week was marked by some adjustments. However, volatility persisted, and our exchange rate remained under pressure, as did other emerging market currencies. The fragile external environment remains the primary driver of this behavior. Even so, it is too early to say that the geopolitical landscape will remain at the forefront; perhaps the market will return to a divided focus, with economic indicators back on the radar, without losing sight of the war, of course. We will see what the next chapters bring next week!

The next Copom meeting is approaching, and with it, the buzz about the Central Bank's next steps grows by the day. Comments in meetings, interviews, indicators... everything becomes a reason to speculate whether the interest rate cut will be more or less aggressive, as a cut is considered a certainty. Indeed, the Central Bank has been signaling that the Selic rate-cutting cycle is near, but the intensity remains a question for the market. The most recent indicators and the unfavorable external environment suggest that the Central Bank will be cautious in this month's decision, and the yield curve reflects this expectation. We shall see!


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