ITC: Lula's unexpected victory may lead to a reversal in Brazilian assets, and the real could open up 5% higher

(1) ITC Senior Forex Analyst Sean Carlo stated that Lula's victory in the Brazilian election was a huge surprise, as recent polls showed Bolsonaro had an 80% chance of winning. (2) The market reaction is quite polarized: Brazilian assets previously surged following the first-round election results on bets for market-friendly policies, but now this trend is likely to reverse. (3) The US dollar against the Brazilian real may gap up by 5%, similar to the 5% gap down observed after the first round of the election.