Never miss a story from Dimitri Zabelin

Subscribe to receive daily updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Dimitri Zabelin

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

TALKING POINTS – Brazil Election, Emerging Markets, BRL/USD, ibovespa, Trade Wars, USDOLLAR

  • Second round of Brazilian presidential election to take place Sunday, October 28
  • Market-favorite Jair Bolsonaro of the Social Liberal Party is leading in the polls
  • Cycle-sensitive assets are vulnerable to market fluctuations caused by the election

See our Q4 forecasts to learn what will drive key asset prices through year-end!

The Brazilian Real and benchmark IBOVESPA equity index have been subject to higher-than-usual volatility as Brazil undergoes its most turbulent election since 1985. The first round of elections saw Fernando Haddad of the Worker’s Party (PT) walk away with 29% of the vote. Social Liberal Party leader Jair Bolsonaro garnered 46%.

The second round will be held this Sunday on October 28th. While Bolsonaro’s market-oriented solutions to Brazil’s economic woes are garnering support from investors overseas, the long-term political risk he poses may overshadow any short-term relief his agenda offers.

The uncertainty in this election is likely to continue weighing down on emerging markets, which are already being pressured by broader risk aversion. This is primarily driven by a strengthening US Dollar and escalating trade wars, among other risk-inducing events that EM’s have undergone this year.

The Australian and New Zealand Dollars may be vulnerable to market swings caused by the polarizing election and rise of anti-establishment candidates. Risk-off assets – such as the Swiss Franc, Japanese Yen and US Dollar - may rise amid the uncertainty.

TRADING RESOURCES

--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter