According to analysts at Rabobank, BRL’s rollercoaster ride has continued well past the October election, as a combination of global and local uncertainties prompted a wider than expected trading range so far in 2019.

Key Quotes

“In twelve months, BRL has lost 4% against the USD, in line with peer-currency benchmarks. Our FX models suggest that nearly all of the BRL weakening in that period is due to global drivers. The most important one is the stronger USD globally - reflecting the direct and indirect impact from the implementation (and threats) of new trade tariffs by the U.S.”

“The BRL-impact of the stronger USD was cushioned by lower expectations for the path of U.S. short-term interest rates, as well as narrower (idiosyncratic) premium implicit in Brazilian assets. The latter follows increased optimism about the outlook for economic reforms.”

“Technical factors in the local FX market have not changed materially so far this year. In aggregate, FX positions of key private-sector players have barely changed from late 2018, standing around USD 46 billion (long in USD).”

“The total amount of “FX support” (i.e. hedge and liquidity) supplied by the BCB to the market currently stands at USD 76.6 billion, just a bit lower than in end-2018 (owing to repo lines).”

“As per our forecast, we continue to look for USD/BRL at 3.70 for end-2019, as we anticipate further narrowing of premium in Brazilian assets following the approval of an effective pension reform.”

“In our view, a big disappointment in the final expected cost-savings from the pension reform could take BRL towards the level of 5.0 against the USD.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD consolidates around 1.1150 amid mixed trade headlines

EUR/USD is trading around 1.1150, consolidating previous gains. President Trump has expressed optimism about clinching a deal with China, while some officials have cast doubts. Brexit headlines are set to impact the euro as well.

EUR/USD News

GBP/USD slides toward 1.29 ahead of critical vote on the Brexit deal

GBP/USD falling toward 1.29 as parliament is set to debate and vote on UK PM Johnson's Brexit deal. The vote on the program to complete the process quickly is also critical. 

GBP/USD News

USD/JPY holds steady above mid-108.00s

The USD/JPY pair failed to capitalize on the early uptick to multi-day tops and is currently placed at the lower end of its daily trading range, just above mid-108.00s.

USD/JPY News

Gold: Choppy inside monthly trendline, 200-bar SMA

Gold’s repeated failures to cross 200-bar Simple Moving Average (SMA) fails to portray the yellow metal’s weakness as the monthly trend line limits its downside. The Bullion presently tests the support line while flashing $1,483.55.

Gold News

Brexit drama does not deter the pound

Despite an unending series of Parliamentary setbacks for Prime Minister Boris Johnson’s attempt to clinch the UK exit from the European Union, Sterling has retained almost all of its gains of the past ten days, suggesting that his Brexit deal will eventually be approved.

Read more

Forex MAJORS

Cryptocurrencies

Signatures