Looking at the recent changes in Brazil the technicals and fundamentals are lining up for a stronger BRL.
BRL may open stronger Thursday, as the central bank delivered an expected 50bp rate cut, but notably removed the following
sentences from the statement.
“In the Copom evaluation, the evolution of the basic scenario and the balance of risks
prescribes an adjustment in the degree of monetary stimulus, with a reduction of the Selic
rate by 0.50 percentage points. The Committee considers that the consolidation of the benign scenario for prospective inflation should allow an additional adjustment of equal
magnitude."
It also took out the phrase "in any further adjustments in the degree of stimulus" from the
following line in the October statement: “The Copom understands that the current stage of
the economic cycle recommends caution in any further adjustments in the degree of
stimulus.”
- S&P followed the rate decision by upgrading Brazil’s outlook from stable to positive.
Looking at the technicals the EUR/BRL is currently at the Monthly Pivot and is making lower highs and lower lows - finding resistance above.
There is a lot of possible liquidity below the Yearly Pivot as this acted as strong support from the summer.
BRL may open stronger Thursday, as the central bank delivered an expected 50bp rate cut, but notably removed the following
sentences from the statement.
“In the Copom evaluation, the evolution of the basic scenario and the balance of risks
prescribes an adjustment in the degree of monetary stimulus, with a reduction of the Selic
rate by 0.50 percentage points. The Committee considers that the consolidation of the benign scenario for prospective inflation should allow an additional adjustment of equal
magnitude."
It also took out the phrase "in any further adjustments in the degree of stimulus" from the
following line in the October statement: “The Copom understands that the current stage of
the economic cycle recommends caution in any further adjustments in the degree of
stimulus.”
- S&P followed the rate decision by upgrading Brazil’s outlook from stable to positive.
Looking at the technicals the EUR/BRL is currently at the Monthly Pivot and is making lower highs and lower lows - finding resistance above.
There is a lot of possible liquidity below the Yearly Pivot as this acted as strong support from the summer.
Comment:
holding shorts
