FXstreet.com (Barcelona) - Brown Brothers Harriman analysts note that Brazillian markets reopen today after being closed Thursday for holiday, and the offshore FX market Thursday was little changed from Wednesday's close, suggesting onshore market isn't going to react that well to the 50 bp hike when it reopens Friday.

They believe that the BRL reaction will also depend on how wider EM is faring (rather poorly, to say the least), and so we fully expect USD/BRL to move higher Friday. They see that the next big target is the December high near 2.14. They write, “Note that 2.10 is the 62% retracement objective of the big 2009-2011 drop in USD/BRL, and break above targets the March 2009 high near 2.45. BCB swaps today would send a strong signal that it wants to keep BRL below 2.10. Lack of action risks a continuation of the disorderly move that's shaped up this week.”