USD/BRL Outlook:
Bearish, as the rate is below its recent average and near recent lows, reflecting pressure from domestic and global factors.
Key drivers:
• Rate gap: The Federal Reserve's decision to keep interest rates steady contrasts with Brazil’s high SELIC rate, which benefits the BRL.
• Risk/commodities: Rising oil prices have bolstered the BRL due to Brazil's significant oil exports, although the USD remains strong globally.
• Global economic influences: Renewed US dollar strength and evolving interest rate expectations have pressured the BRL, as it remains sensitive to geopolitical issues.
Range:
Expect USD/BRL movements to hold within its recent range, drifting towards the lower end.
What could change it:
• Upside risk: A stronger than expected US job report could boost the dollar significantly.
• Downside risk: Continued geopolitical tensions and market shifts could further weaken the dollar, lowering the USD/BRL rate.
