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BRAZIL: USDBRL Shrugs Off Haddad Murmurings as BCB & Fed Decisions Awaited

BRAZIL
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  • The Brazilian Real has continued to trade on the front foot this week, extending the currency’s recovery from last Thursday’s low to 3.4% against the greenback. Price action on Tuesday was significant for two reasons. First of all, it showed resilience to finance minister Haddad’s comments on the BCB needing to consider declining global rates and secondly, the broad greenback bounce following firmer US data on Tuesday had very little effect on USDBRL.
  • Overall, this bolsters the point that divergent monetary policy paths from both central banks should be supportive for BRL. Yesterday’s close below the 50-day EMA in USDBRL and the previous pivot around 5.50/52 should also be technically significant for the pair.
  • More meaningful support lies at 5.3768, the Aug 19 low, which should be a key area of focus in the coming sessions.
  • Aside from the BCB rate decision, formal job creation figures and tax collections data are also expected to cross this week.
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  • The Brazilian Real has continued to trade on the front foot this week, extending the currency’s recovery from last Thursday’s low to 3.4% against the greenback. Price action on Tuesday was significant for two reasons. First of all, it showed resilience to finance minister Haddad’s comments on the BCB needing to consider declining global rates and secondly, the broad greenback bounce following firmer US data on Tuesday had very little effect on USDBRL.
  • Overall, this bolsters the point that divergent monetary policy paths from both central banks should be supportive for BRL. Yesterday’s close below the 50-day EMA in USDBRL and the previous pivot around 5.50/52 should also be technically significant for the pair.
  • More meaningful support lies at 5.3768, the Aug 19 low, which should be a key area of focus in the coming sessions.
  • Aside from the BCB rate decision, formal job creation figures and tax collections data are also expected to cross this week.