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BRAZIL: USDBRL Rises 0.8% Ahead Of Resumption Of Supreme Court Case

BRAZIL
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  • USDBRL has risen towards 5.49 in early trade Thursday, amid an uptick in core UST yields following further healthy US jobless claims data. The move in USDBRL comes ahead of the resumption of a ruling at the Supreme Federal Court, with a fiscal impact of BRL 20bn. Valor reports that the ruling is scheduled to resume this Friday, after the case was suspended in May for further review.
  • The case involves mining giant Vale, and at hand is the application of corporate income tax and the social contribution on net income to national companies based on profits generated by affiliates and controlled entities located overseas in countries that have treaties with Brazil. The case comes as fiscal concerns remain high and Finance Minister Haddad said this week that he had spoken to President Lula on the importance of the fiscal framework. Data released earlier showed a widening of the central government budget deficit to BRL 22.4bn in August.
  • For USDBRL, initial resistance is at 5.5971, the Sep 23 high, and a stronger recovery would refocus attention on resistance at 5.6917, the Aug 30 high and a bull trigger. Key support is at 5.3768, the Aug 19 low.
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  • USDBRL has risen towards 5.49 in early trade Thursday, amid an uptick in core UST yields following further healthy US jobless claims data. The move in USDBRL comes ahead of the resumption of a ruling at the Supreme Federal Court, with a fiscal impact of BRL 20bn. Valor reports that the ruling is scheduled to resume this Friday, after the case was suspended in May for further review.
  • The case involves mining giant Vale, and at hand is the application of corporate income tax and the social contribution on net income to national companies based on profits generated by affiliates and controlled entities located overseas in countries that have treaties with Brazil. The case comes as fiscal concerns remain high and Finance Minister Haddad said this week that he had spoken to President Lula on the importance of the fiscal framework. Data released earlier showed a widening of the central government budget deficit to BRL 22.4bn in August.
  • For USDBRL, initial resistance is at 5.5971, the Sep 23 high, and a stronger recovery would refocus attention on resistance at 5.6917, the Aug 30 high and a bull trigger. Key support is at 5.3768, the Aug 19 low.