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BRAZIL: December Formal Job Creation, Central Government Budget Balance

BRAZIL
BulletEM BulletEmerging Market News
  • After yesterday’s expected 100bp Selic rate hike, attention today turns to formal job creation and central government budget data today, both for December. Analysts see a 405.4k decline in formal jobs last month, following a 106.6k gain the month before (1300GMT/0800ET), while the central government is expected to have recorded a BRL 20.5bn surplus in December (1730GMT/1230ET).
    • Dec. Formal Job Creation Total, est. -405,433, prior 106,625
    • Dec. Central Govt Budget Balance, est. 20.5b, prior -4.5b
  • Despite the Copom’s continued guidance for another 100bp hike in March, USDBRL has spiked higher on the open, with the pair currently up 0.8% above 5.91. Analysts say that the country’s unresolved fiscal issues will potentially still weigh on BRL ahead, with BBVA saying that more sustained momentum for the BRL depends on a satisfactory outcome for the fiscal adjustment.
  • Our technical analyst notes that a medium-term bull cycle for USDBRL remains in play, with initial resistance at 5.9945, the 20-day EMA. On the downside, a clear breach of 5.8675, the Dec 12 low, would expose the 5.8000 handle.
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  • After yesterday’s expected 100bp Selic rate hike, attention today turns to formal job creation and central government budget data today, both for December. Analysts see a 405.4k decline in formal jobs last month, following a 106.6k gain the month before (1300GMT/0800ET), while the central government is expected to have recorded a BRL 20.5bn surplus in December (1730GMT/1230ET).
    • Dec. Formal Job Creation Total, est. -405,433, prior 106,625
    • Dec. Central Govt Budget Balance, est. 20.5b, prior -4.5b
  • Despite the Copom’s continued guidance for another 100bp hike in March, USDBRL has spiked higher on the open, with the pair currently up 0.8% above 5.91. Analysts say that the country’s unresolved fiscal issues will potentially still weigh on BRL ahead, with BBVA saying that more sustained momentum for the BRL depends on a satisfactory outcome for the fiscal adjustment.
  • Our technical analyst notes that a medium-term bull cycle for USDBRL remains in play, with initial resistance at 5.9945, the 20-day EMA. On the downside, a clear breach of 5.8675, the Dec 12 low, would expose the 5.8000 handle.