The only question it seems for the market is whether the BCB will kick off the cycle with a 25 bps or 50 bps cut.

The interest rates market already prices close to 500 bps of easing over the next year – so may not drop too much further – but we think the Brazilian Real may not need to sell off too harshly. After all, real interest rates remain hugely in positive territory and a recent sovereign rating upgrade – and lower volatility – suggest the BRL will continue to be a recipient of carry trade flow.