2018.07.1919:38:00UTC+00BRAZIL: Trump Criticizes U.S. Monetary Policy And Leads DI Rates Lower

The one-day interbank deposit futures rates (DI rates) in Brazil changed direction at the end of the session and settled lower Thursday, after U.S. President, Donald Trump criticized the monetary policy tightening in his country, leading Treasury rates down as a result.

During an interview with CNBC, Trump said that he is not "super happy" about the Federal Reserve decision to raise U.S. interest rates. So far in 2018, the country's central bank has increased its benchmark rate at two occasions and pointed to further monetary policy tightening down the road.

"Everything that Trump says ends up moving the markets. [His comments] weakened the dollar increase compared to the real as well as Treasury rates. That had an effect on DI rates because at the start of the session the dollar was rising more than 1%," said H. Commcor's broker Cleber Alessie.

Trump's comments about the Federal Reserve monetary policy are far from standard protocol, said Rafael Passos, an economist at Guide.

"Trump is breaking the White House non-interference track record regarding monetary policy. That made the greenback lose steam abruptly," he added.

Alessie added that DI rates are also adjusting to potentially no changes in the Brazilian benchmark interest rate (Selic) this year. "Everything, however, could change until the end of the elections," he added.

The January 2019 DI contract rate fell to 6.72%, from 6.74% Wednesday, while the January 2020 DI rate was at 8.11%, from 8.15% in the previous settlement. The January 2021 DI contract rate was at 9.11%, from 9.16%.