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BRAZIL: USDBRL Rises 0.9% Ahead Of Bi-Monthly Fiscal Report

BRAZIL
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  • USDBRL has risen 0.9% on Friday, amidst a dip in equity markets and higher core yields,
    unwinding losses since the Copom and FOMC meetings on Wednesday. However, the pair remains 1.5% lower on the week and below the 5.50 pivot crossed ahead of the Copom meeting.
    • The move lifts the pair away from key support at 5.3768, the Aug 19 low, but still well below resistance at 5.6917, the Aug 30 high.
    • Looking ahead, attention will be on the government’s bimonthly fiscal report which may be released last today, before focus shifts to next week’s Copom minutes and BCB quarterly inflation report.
    • While further Selic rate hikes by the BCB should continue to provide support to the BRL, CIBC believes that persistent and elevated fiscal risks are likely to prevent a sustained BRL rally from current levels. They prefer selling USD/BRL spikes to the 5.56-5.60 range into next quarter.
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  • USDBRL has risen 0.9% on Friday, amidst a dip in equity markets and higher core yields,
    unwinding losses since the Copom and FOMC meetings on Wednesday. However, the pair remains 1.5% lower on the week and below the 5.50 pivot crossed ahead of the Copom meeting.
    • The move lifts the pair away from key support at 5.3768, the Aug 19 low, but still well below resistance at 5.6917, the Aug 30 high.
    • Looking ahead, attention will be on the government’s bimonthly fiscal report which may be released last today, before focus shifts to next week’s Copom minutes and BCB quarterly inflation report.
    • While further Selic rate hikes by the BCB should continue to provide support to the BRL, CIBC believes that persistent and elevated fiscal risks are likely to prevent a sustained BRL rally from current levels. They prefer selling USD/BRL spikes to the 5.56-5.60 range into next quarter.