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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
BRAZIL
- Renewed geopolitical tensions, market uncertainty and the significant CNY depreciation have left EM currencies vulnerable against the US Dollar in the second quarter.
- We saw that EM FX have historically been sensitive to periods of significant CNY depreciation as FM portfolio managers reassess their risk when implied vol on the yuan surge following the August 2015 ‘CNY devaluation’ that generated a market shock (SP500 was down 10% following that event).
- Momentum on BRL has been strongly bearish in Q2 and is one of the worst performing EM currency down nearly 8% against the greenback.
- This follows the strong gains in Q1 with BRL up 17.6% against the US Dollar, mostly driven by the aggressive tightening cycle run by the CBB and the elevated nominal yields.
- USDBRL broke above the psychological 5 resistance in the beginning of this month, and is gradually approaching its 100DMA at 5.1760.
- A break above that level would open the door for a move up to 5.22, which corresponds to the 38.2% Fibo retracement of the 4.0040 – 5.9710 range.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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