FXStreet (Córdoba) – USD/BRL rebounded on Friday and climbed back toward 3.100, recovering further after bottoming on Thursday at 3.0290, the lowest level since May 21. Despite rising today more than 1% the pair is still headed to the third weekly decline in a row.
The real continues to hold a modest bullish bias in the short term against the US dollar despite the economic situation in Brazil. “Brazilian assets are caught up in a vortex of weaker economic data, higher inflation data, pricing in more monetary tightening and less FX swaps. Not to mention a messy legislative agenda and the turbulence in global markets, of course”, noted Ilan Solot, Emerging Markets Strategist at Brown Brothers Harriman.
Solot pointed out that they prefer to stay on the sidelines in the short term considering that there are too many variables at play. “In the long term, however, the incoming information re-enforces our call for a gradually weaker BRL and a flattening tendency of the local rates curve.”
(Market News Provided by FXstreet)