USD/BRL forecast at 5.50 for Q2 – CIBC

Matías Salord FXStreet

Analysts at CIBC, forecast the Brazilian real will depreciated further against the US dollar in the short-term. They see USD/BRL at 5.50 in Q2 and at 5.00 in Q1 2021.

Key Quotes:

“USD/BRL continued its upward trend since our last publication, approaching the 6.0 mark, following a Supreme Court investigation on President Bolsonaro and his family. The scandal already caused the resignation of the former head of the federal police and the Minister of Justice Sergio Moro, via alleged political pressures by the president. This situation will likely dominate Brazil’s political environment for a few months, while investigation leaks will continue to be harmful for those with long BRL positions.”

“On the monetary policy front, the BCB cut the overnight rate by 75 bps to 3.00%, against market consensus and our 50bps forecast. Moreover, it also signalled another rate cut - but not larger than 75bps - at its next meeting. As a result, we’ve revised our Selic rate forecast to 2.0%-2.25% by the end of 2020. The clear dovish stance by the BCB, despite larger fiscal risks, should also put pressure on the BRL in the short-term.”

“We note the ongoing large portfolio outflows, as political turmoil crowds local headlines. Hence, we revised our USD/BRL forecast for Q2 to 5.50.”

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

GBP/USD weakens below 1.3250 as UK Prime Minister Keir Starmer resigns

The GBP/USD pair loses ground to near 1.3245 during the early Asian trading hours on Tuesday. Political uncertainty in the United Kingdom continues to weigh on the British Pound against the US Dollar. The preliminary readings of the S&P Global Purchasing Managers Index from both the US and the UK are due later on Tuesday.

EUR/USD moves little amid market caution on ongoing US-Iran talks

EUR/USD steadies after registering modest losses in the previous day, trading around 1.1430 during the Asian hours on Tuesday. The currency pair remains locked in a tight range as traders closely monitor diplomatic developments surrounding ongoing talks between Washington and Tehran in Bürgenstock, Switzerland.

Gold holds lower ground near $4,150 on hawkish Fed bets

Gold struggles to capitalize on the previous day's modest gains and edges lower to near $4,150 in the Asian session on Tuesday. Firming expectations for a Fed rate hike and geopolitical uncertainties help the US Dollar to stand firm near its highest level since May 2025, undermining bullion.

NYSE parent ICE, OKX partners to expand tokenized equities and digital asset markets

The New York Stock Exchange parent company, Intercontinental Exchange, and crypto exchange OKX have formed a joint venture to develop infrastructure for tokenized and blockchain-native financial products, according to a statement on Monday. The venture will seek to operate as a US-registered broker-dealer and futures commission merchant, subject to regulatory approvals.

Are American consumers actually “resilient“?

A common label gets placed upon American buyers: resilient. Just last week, Marianne Lake, the CEO of Consumer and Community Banking — and a member of the JPMorganChase Operating Committee — affirmed this sentiment. While she did note some weariness regarding future inflation’s effect on consumers, she reiterated the common adjective: resilient.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.