USD/BRL expected to test 4.50 before end 2016 – Rabobank

By FXStreet FXStreet (Edinburgh) – Strategist at Rabobank Christian Lawrence sees the Brazilian currency losing further ground in the next months.

Key Quotes

“USD/BRL has been sitting just above the 4 handle so far this year but we view current levels as expensive and favour a move up to 4.50 before year-end”.

“Although anecdotally there has been talk of increased carry trade interest providing support, we think this is likely to prove short-lived and BRL will come under pressure again ahead”.

“Indeed, we find it hard to make a constructive story for BRL given our bearish global view and in light of the domestic landscape, with expectations of at least a 2.6% y-o-y contraction in GDP this year following -3.7% y-o-y in 2015”.

“Political issues may have fallen out of the headlines of late, but when Congress reconvenes we are likely to see political stress once more, and BRL will also struggle in light of this”.
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Source:: FX Street