The end game in Brazil

May 11, 2016

The headlines surrounding Brazil could not be worse, but the currency performance continues to defy gravity. Year to date, it has outperformed even the yen and over the past week, it’s 2% firmer vs. the dollar, whereas pretty much every other currency is weaker. President Rousseff could well be out of a job today, should the Senate vote reach the required majority, which appears likely. The economy has been crushed over the past year and the recession is seen continuing throughout this year. The real’s better performance is in part based on the expectation that Brazil will see a change of leadership, something which is now a near certainty. But some of the currency’s recovery is simply owing to the level of underperformance seen last year, with a third of its value vs. the dollar lost. Can a change of government turn-around the economy that quickly? In all likelihood, no. This means that the currency could be vulnerable over coming months, once the realisation that a change of leadership still means the same underlying problems and weaknesses remain.

Elsewhere, the dollar has taken a pause in the recent rally, although that has seen it recover more than 2.5% of its value from the lows seen early May. The main focus for the majors during the second half of the week will be with sterling. Production data today is seen recording a modest recovery of 0.5% on the headline rate. Thereafter, it’s the Inflation Report tomorrow that will grab the attention. Carney will have a difficult job of trying to temper speculation over the impact of a potential Brexit on the economy and also on monetary policy. Sterling, for its part, has managed to shake-off such concerns for the time being, but the options market continues to price the uncertainty. It’s likely that we’ll see a greater currency sensitivity to the reading from polls going forward towards the 23rd June referendum date.

Publication source
FxPro information  FxPro reviews

February 24, 2017
Oil prices slightly grew
Brent oil prices extended their recovery in the Asian session on Thursday. Buyers led the price higher and broke 56.50 dollars per barrel in the early European morning...
February 24, 2017
Dollar drifts on Fed's lack of optimism
FOMC February meeting minutes released on Wednesday failed to provide support for the bulls to manage a sustainable breakout above 101.50...
February 24, 2017
Can gold continue post Fed rally?
Gold jumped to a 3 month high today, snapping a 3-day losing streak today after traders digested yesterday’s minutes meeting from the US Federal Reserve...

FIBO Group Rating
OANDA Rating
Orbex Rating
OctaFX Rating
NPBFX Rating
FOREX.com Rating

GTOptions Rating
First Binary Option Service Rating
Binary Brokerz Rating
Binary.com Rating
Beeoptions Rating
Migesco Rating