BRL short term gains unlikely to sustain, uptrend to resume

FX_IDC:USDBRL   U.S. Dollar / Brazilian Real
71 0 3
Technically, USDBRL             has been losing upswings momentum as the rejection of resistance at 4.0050 levels and as soon as the pair approached 21DMA the bears began pushing downwards, in between a hanging man pattern is formed on rallies to signal weakness in previous upswings, leading oscillators are also converging these price declines. The next strong support is only seen at 3.9550 levels.

Nevertheless, this week markets are back to full-time activity as the carnival             festivities are over. The main domestic price drivers in the weeks to come are likely to be the usual suspects: lack of political cohesion and concerns about the fiscal consolidation.

The government postponed the budget announcement to March, heightening concerns about its commitment to the current budget target (primary surplus of 0.5% of GDP). Furthermore, there are discussions on introducing a range for the primary surplus target.

In terms of data, the highlight of the week is December retail sales. We forecast a 2.0% decline in the retail sales index, partially paying back the increase in November due to the Black Friday sales.

For the broader index, the fall of 6.3% m/m sa in auto sales should contract the retail sales index by 2.7% m/m during the month, representing a 8.7% decrease for the whole year.

Concerns about the fiscal consolidation, and the likely resumption of political infighting will keep weighing on local assets.

Central banks that uphold pegs have been under strain after tumbling commodity prices and slowing global growth weakened currencies from Brazil to Russia by at least 18 percent in the past year.

We maintain our long USDBRL             recommendation and keep long exposure to real rates as Brazil enters a regime of fiscal dominance.
EN English
EN English (UK)
EN English (IN)
DE Deutsch
FR Français
ES Español
IT Italiano
PL Polski
SV Svenska
TR Türkçe
RU Русский
PT Português
ID Bahasa Indonesia
MS Bahasa Melayu
TH ภาษาไทย
VI Tiếng Việt
JA 日本語
KO 한국어
ZH 简体中文
ZH 繁體中文
AR العربية
Home Stock Screener Forex Signal Finder Cryptocurrency Signal Finder Economic Calendar How It Works Chart Features House Rules Moderators Website & Broker Solutions Widgets Stock Charting Library Feature Request Blog & News FAQ Help & Wiki Twitter
Profile Profile Settings Account and Billing My Support Tickets Contact Support Ideas Published Followers Following Private Messages Chat Sign Out