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TD Securities Recommend Short NZD/BRL Trade

BRL
  • Late yesterday, TD Securities issue a new trade recommendation: Sell NZD/BRL at 2.9662, to target 2.7860 with a stop/loss at 3.0730.
  • On the trade, they write that relative growth dynamics are moving in opposite directions: New Zealand has seen the second largest downgrade to growth expectations, while Brazil's growth expectations sit near highs.
  • They add that with stronger growth and accommodative fiscal policy, the BCB could disappoint market expectations for a cut in the next few months even if inflation has continued to decelerate.
  • Meanwhile, rising expectations of a NZ recession could make it challenging to fund the CAD.

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