News & Analysis at your fingertips.

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.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Mixed
Oil - US Crude
Bearish
Wall Street
Bearish
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
Bearish
GBP/USD
Bullish
USD/JPY
Mixed
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
More View more
Real Time News
  • Gold prices appear to have fallen to oversold territory and may look for a technical rebound. An immediate support level can be found at US$ 1,750. https://t.co/kpHCe2aLth
  • Heads Up:🇷🇺 Markit Manufacturing PMI (NOV) due at 06:00 GMT (15min) Previous: 46.9 https://www.dailyfx.com/economic-calendar#2020-12-01
  • I mentioned before, but so far, the average seasonality for the $SPX is aligning to 2020's top months (April then November). This - along with record highs - will likely feed expectations for December: https://www.dailyfx.com/forex/video/daily_news_report/2020/12/01/Dow-and-Dollar-Enter-December-with-Technical-Breaks-and-Temptation-.html https://t.co/5uICTgtHoA
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 94.17%, while traders in NZD/USD are at opposite extremes with 73.77%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/HUeuen6CZW
  • Forex Update: As of 05:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.33% 🇳🇿NZD: 0.32% 🇨🇦CAD: 0.31% 🇪🇺EUR: 0.26% 🇨🇭CHF: 0.20% 🇯🇵JPY: -0.08% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/haJtgLdWR1
  • Indices Update: As of 05:00, these are your best and worst performers based on the London trading schedule: US 500: 0.86% Wall Street: 0.81% Germany 30: 0.50% FTSE 100: 0.13% France 40: 0.04% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/X0IBWDdCcR
  • 🇮🇳 Markit Manufacturing PMI (NOV) Actual: 56.3 Expected: 57.3 Previous: 58.9 https://www.dailyfx.com/economic-calendar#2020-12-01
  • Learn why dividend stocks are favored by investors and why it might be the right choice for you here:https://t.co/VUsJFHBARb https://t.co/bv5Eu2Pnsp
  • Heads Up:🇮🇳 Markit Manufacturing PMI (NOV) due at 05:00 GMT (15min) Expected: 57.3 Previous: 58.9 https://www.dailyfx.com/economic-calendar#2020-12-01
  • Why short stocks? The answer to this question is multi-layered but in general, shorting stocks presents an opportunity trade a decline in a share’s price. Learn more here: https://t.co/2a2evVhhEM https://t.co/6btpCvVTt5
BRL, Ibovespa at Risk From Brazil-China Investment Negotiations

BRL, Ibovespa at Risk From Brazil-China Investment Negotiations

2019-05-23 02:00:00
Dimitri Zabelin, Analyst
Share:

TALKING POINTS – BRL, IBOVESPA FUTURES, BOLSONARO, GLOBAL GROWTH

  • Brazil Vice President Hamilton Mourao to meet with high-level officials, Xi Jinping
  • This is part of a diplomatic effort to fortify relationship after Bolsonaro’s comments
  • Weaker demand out of China, slow pension reform progress weighs on Brazil econ

See our free guide to learn how to use economic news in your trading strategy!

BRAZIL-CHINA RELATIONS

BRL and the benchmark Ibovespa equity index will be closely watching the five-day negotiations between Brazilian Vice President Hamilton Mourao and high-level Chinese officials. Hamilton is expected to meet with General Secretary of the Communist Party of China Xi Jinping. Brazil-China relations have somewhat deteriorated ever since Jair Bolsonaro became President.

“The Chinese can buy in Brazil, but they can’t buy Brazil”, said Bolsonaro. Most of his appointees have a military background, and as such, are hesitant to have close ties with a country that potentially poses a security threat. This comes against the backdrop of greater scrutiny over potential security threats posed by Chinese tech giant Huawei.

Both China and Brazil are major players in the emerging market association known as BRICS – Brazil, Russia, India, China and South Africa. China is also Brazil’s largest trading partner and the biggest consumer of Brazilian iron ore. Brazil may also soon replace the US as China’s biggest client of imported soybean products due to Beijing’s tariff imposition on US-based soybean crops.

Brazil-China tensions have already somewhat softened after officials in Sao Paulo stated that they will no longer seek WTO intervention on China’s policies on sugar tariffs. The concession was likely a gesture of good faith ahead of this week’s talks and may provide a more favorable backdrop to investment negotiations.

Chart showing Chinese imports of coal

However, the small boon granted from the US-China trade war is outweighed by the cost associated with the economic conflict. As an emerging market economy, Brazilian assets are particularly sensitive to changes in global risk appetite. This reaction will only be amplified as the government attempts to open up Brazil’s economy to the world, making it more in sync – or vulnerable – to changes in global demand.

BRAZIL ECONOMY OUTLOOK

A few days ago, the Brazilian Economy Ministry cut the country’s GDP forecast for 2019 from 1.6 percent to 2.2 percent. Some of this has to do with the slow progress and uncertain outlook on Bolsonaro’s market-disrupting pension reforms and the implications they have domestic growth prospects. Pessimism over the outcome has led to slower economic activity and reduced the appeal of the Brazilian Real.

USDBRL at its Highest Point Since October 2018 – Daily Chart

Chart Showing USD/BRL

The Ibovespa has been showing some improvement, with futures retesting support after previously breaking through it. While Brazilian markets have been primarily driven by the progress on pension reforms, this market move may have less to do with the structural plans and more with the central bank. If economic data continues to underperform, it may prompt monetary authorities to adjust to a more dovish stance.

Ibovespa Futures Retesting Support

Chart Showing Ibovespa futures

The prospect of cheaper credit may therefore be the leading cause behind the rally in the Ibovespa. Looking ahead, US-China trade relations will persist as a global fundamental headwind and will continue to pressure Brazilian exports. Looking ahead, negotiations between China and Brazil will be crucial to see if a stronger relationship will lead to greater investment that could help lift up Brazilian economic activity.

FX TRADING RESOURCES

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

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

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

DISCLOSURES