We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Oil - US Crude
Mixed
Bitcoin
Bullish
More View more
Real Time News
  • Crude oil prices may encounter significant selling pressure if China retaliates against the US and pushes back trade war talks. Get your crude #oil market update from @ZabelinDimitri here: https://t.co/vMwa6rmFpH #OOTT https://t.co/vPkJ3oQgwV
  • The Singapore Dollar is driven by the Monetary Authority of Singapore, which manages exchange rate instead of short-term interest rates. Learn more on the $SGD and how to trade it. Get your update from @ddubrovskyFX here: https://t.co/eWLM9XZs5Y https://t.co/OWuwGML4Ch
  • RT @FT: Huawei admits that US sanctions are hurting https://t.co/GIT4XSfszx
  • RT @WSJecon: Mexico’s inflation eased in September, coming in line with the Bank of Mexico’s 3% target for the first time in three years ht…
  • My phone's decided to give up the ghost and I've been phoneless for 24 hours. Not coincidentally, I've been a machine tackling errands around the house. What a time to be alive.
  • #Gold remains stuck in a range as a range of conflicting forces battle and fail to take control of price action. Get your $gld market update from @nickcawley1 here: https://t.co/pw7UjkUyqH $XAUUSD https://t.co/YD8L6knjhe
  • Geopolitical developments send oil prices soaring or falling. Get your market update here: https://t.co/0znHZPvPON https://t.co/s358dvMBeR
  • Currency markets may be battered by breakneck volatility if a slowdown in global economic growth triggers a collapse in the fragile market for collateralized loan obligations (CLOs). Get your market update from @ZabelinDimitri here:https://t.co/KfjjtaXs7b https://t.co/sWeSlv33pb
  • The #Dow Jones and #Nasdaq 100 will await key earnings from some of the world’s largest manufacturers and tech companies while the #DAX grapples with freshly-imposed tariffs. Get your equities market update from @PeterHanksFX Here: https://t.co/u2lG19JFt3 https://t.co/OHs4rQEH7T
  • Crude #oil prices are consolidating above a key support zone we’ve been tracking for more-than three months now. Get your market update from @MBForex here: https://t.co/XaACvEpLG4 #OOTT https://t.co/XjmjUt4Par
Brazilian Real Gains On Bolsaro Win, Huge Challenges Ahead

Brazilian Real Gains On Bolsaro Win, Huge Challenges Ahead

2018-10-29 02:00:00
David Cottle, Analyst
Share:

TALKING POINTS - BRAZIL, ELECTION, BOLSONARO, USD/BRL, BRAZILIAN REAL

  • Markets have taken the election of Jair Bolsonaro to Brazil’s Presidency quite calmly
  • They had some time to get used to the idea, and seem to have largely priced it in
  • However, the new President faces challenges that have defied much more experienced players

Fourth-quarter technical and fundamental forecasts from the DailyFX analysts are out now.

The Brazilian Real has strengthened modestly to new five-month lows against the US Dollar on the widely expected victory of far-right candidate Jair Bolsonaro in the country’s turbulent presidential election on Sunday.

Brazil joins the growing list of countries in which perceived anti-establishment candidates have done well, with Bolsonaro’s win due in no small part to the corruption scandals plaguing previous administrations, notably the preceding two.

Markets Seem Sanguine At The Election Result

The Real’s immediate reaction suggests that markets have at least made their peace with the advent of Bolsonaro, despite his being a self-confessed economic neophyte.

USD/BRL has retraced about half of the gains put in since March, which took it up to three-year peaks in late August as the prospect of higher US interest rates took a heavy toll on Emerging Market currencies in general.

Brazilian Real Gains On Bolsaro Win, Huge Challenges Ahead

Still, while the new administration in Brasilia can probably take heart from this, huge challenges lie ahead. Those higher US rates remain a reality, which will to weigh on economies like Brazil for some time to come. Indeed much of the International Monetary Fund’s recent global growth downgrade was predicated on its fear of stronger headwinds for just such emerging markets.

Urgent Problems Loom Large

The prospect of trade war has not gone away either. For the moment, it seems that US agricultural sanctions against China have provided a boom for Brazilian farmers, who can be alternative suppliers, but local ministers have warned that rising costs may yet hamper competiveness.

Brazil is also in urgent need of economic and fiscal reform, notably in the area of productivity where Gross Domestic Product per worker has stagnated since the 1990s. The Fitch credit rating agency fretted Brazil’s large fiscal deficit, rising debt burden and vast mandatory spending commitments in a report earlier this month. The public pension fund also needs attention quickly.

Now these are all long-standing and crippling domestic problems. Successive administrations have either failed to solve them or not even tried. They now fall to Bolsonaro. It seems that the markets are prepared for the moment to give him the benefit of many doubts, but that happy state is not likely to last.

The economic neophyte needs to get up to speed very quickly.

Resources for Traders

Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.

--- Written by David Cottle, DailyFX Research

Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.