USD/BRL Outlook: Bearish, as the rate is below its recent average and facing pressure from current factors.
Key drivers:
• Rate gap: The Federal Reserve has halted rate cuts, maintaining its interest rate, contrasting with Brazil's higher Selic rate which supports BRL stability.
• Risk/commodities: Oil prices are above average, benefiting Brazil's commodity-driven economy, which boosts demand for BRL.
• One macro factor: Brazil's record trade balance surplus enhances the BRL's attractiveness, improving its external accounts.
Range: The USD/BRL is likely to drift lower within its recent range, given the current pressures.
What could change it:
• Upside risk: A stronger-than-expected US economic report, like manufacturing data, could bolster the USD.
• Downside risk: A potential rate cut from the Central Bank of Brazil could weaken the BRL and pressure the exchange rate further.
