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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
- The Brazilian real has been under pressure to start the week, erasing last Friday’s gains and edging closer to touted resistance in USDBRL.
- As noted, trend conditions remain bullish. The recent bounce from below the 50- and 20-day EMAs is a bullish development and attention remains on 5.7563, the Dec 21 high and bull trigger. The technical significance is enhanced by downtrend resistance, drawn from the pandemic 2020 highs and the 2021 highs, which intersects just above this bull trigger. On the downside, a clear break of support at 5.5476, the bull channel base drawn from the Jun 25 low, is required to threaten the trend.
- Potential tailwinds for USDBRL come in the form of rising US yields and continued pressure on DI swap rates. The DI curve is seen higher by between 5-19 basis points again today.
- Political uncertainty is likely to remain in the spotlight as we proceed through an election year and rising pessimism relating to short-term activity has been evidenced by consistent sell-side downgrades for 2022 growth forecasts.
- Central bank intervention will continue to be an obstacle for USDBRL appreciation and the evolution of resilient inflationary pressures will continue to stoke the debate among the Copom of how far into restrictive territory monetary policy needs to go.
- Markets focus this week will be on tomorrow’s December IPCA inflation data. Estimates indicate that monthly inflation should decelerate to 0.65%, bringing the annual headline rate back below 10% from 10.74% in November.
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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