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 rises above 1.1200 amid some USD weakness

EUR/USD is trading above 1.1200, recovering some of the losses. Earlier, ECB officials expressed concern about global growth President Draghi speaks later. Tension is rising toward the Fed decision.

EUR/USD News

GBP/USD falls to the lowest since January

GBP/USD is trading around 1.2550, the lowest since January. Sterling has been under pressure amid growing uncertainty about Brexit and USD strength.

GBP/USD News

USD/JPY remains directionless above mid-108s on Monday

The USD/JPY pair is struggling to make a decisive move in either direction on Monday as the slightly upbeat market sentiment doesn't allow the safe-haven JPY to gather strength.

USD/JPY News

Gold recovers early lost ground, back above $1240 level

Gold recovered a major part of its early slide and moved to the top end of its daily trading range, above the $1340 region post-US data.

Gold News

Gold: Signs of bullish exhaustion ahead of the Fed

Gold's rally seems to have run its course with signs of bullish exhaustion emerging on technical charts ahead of Wednesday's FOMC (Federal Open Market Committee) rate decision.

Read more

Majors

Cryptocurrencies

Signatures