MNI China Daily Summary: Wednesday, January 22

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BRAZIL: Brazilian Real Opens Higher, USDBRL Approaches Jan 16 Low

BRAZIL
BulletEM BulletEmerging Market News
  • The Brazilian real has opened on the front foot, amid a softer greenback and the ongoing optimism for risk sentiment. Additionally, the latest comments from Brazilian officials may be offering additional BRL tailwinds. 
  • Treasury Secretary Ceron has been speaking to Radio Gaucha Atualidade and indicated the administration will adopt new fiscal measures if necessary, doing what is needed to reach the 2025 fiscal goal. Furthermore, Chief of Staff Costa indicating there will be discussions on ways to lower food prices appears positive at the margin.
  • Alongside the punchy BCB interventions in December, and a commitment to further 100bp rate hikes in coming meetings, the Brazilian real has had a much more positive start to 2025.
  • USDBRL has had another test below 6.00 in recent trade, fast approaching the Jan 16 low of 5.9957. This level closely coincides with the 50-day exponential moving average, a test of which would be the first since October 07 and would be a bearish development for the pair. A clear break would signal scope for a move to 5.8675, the Dec 12 low.
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  • The Brazilian real has opened on the front foot, amid a softer greenback and the ongoing optimism for risk sentiment. Additionally, the latest comments from Brazilian officials may be offering additional BRL tailwinds. 
  • Treasury Secretary Ceron has been speaking to Radio Gaucha Atualidade and indicated the administration will adopt new fiscal measures if necessary, doing what is needed to reach the 2025 fiscal goal. Furthermore, Chief of Staff Costa indicating there will be discussions on ways to lower food prices appears positive at the margin.
  • Alongside the punchy BCB interventions in December, and a commitment to further 100bp rate hikes in coming meetings, the Brazilian real has had a much more positive start to 2025.
  • USDBRL has had another test below 6.00 in recent trade, fast approaching the Jan 16 low of 5.9957. This level closely coincides with the 50-day exponential moving average, a test of which would be the first since October 07 and would be a bearish development for the pair. A clear break would signal scope for a move to 5.8675, the Dec 12 low.