BRL/USD Outlook: The outlook is slightly positive, but likely to move sideways, given the rate is above its recent average and near the mid-range of recent movements.
Key drivers:
- Rate gap: The Central Bank of Brazil has maintained high interest rates, while the U.S. Federal Reserve is anticipated to cut rates, creating pressure on the USD and supporting the BRL.
- Risk/commodities: The increase in U.S. jobless claims contributes to a weaker dollar, benefiting the BRL as it trades on investor confidence in the Brazilian economy.
- One macro factor: The Brazilian government's economic stimulus measures may boost consumption but could complicate the Central Bank's inflation control efforts, impacting the BRL exchange rate.
Range: The BRL/USD is expected to drift within the recent range as key economic developments unfold and uncertainties fluctuate.
What could change it:
- Upside risk: Stronger-than-expected Brazilian economic performance could lead to a firmer BRL.
- Downside risk: Renewed geopolitical tensions involving the U.S. could further weaken the USD, impacting the BRL.
