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Forex Flash: Brazil is gearing up to tighten very soon - BBH

Ilan Solot, EM Strategist at Brown Brothers Harriman believes that Brazil is gearing up to tighten very soon.

He starts by commenting that the statement to the much awaited March COPOM meetings was more conditional than many had expected, but it still left the door wide open to an interest rate hike. He adds that at this point, a hike in mid April is looking ever more likely, probably starting with 50bp. Recent data has come in on the strong side and the government is clearly becoming more alarmed by rising inflation. He writes, “As such, we think the most logical strategy would be to frontload hikes and try to hike the least possible. Our FX view remains the same: we think that USD/BRL will be largely stable through this period and trade within a range of 1.95-2.00. Moves below or above should be seen as reversal opportunities. The idea here is that authorities will play with only one tool at a time.”

Forex Flash: Impressive US data is helping the dollar - BTMU

Derek Halpenny of the Bank of Tokyo Mitsubishi UFJ notes that US data has impressed, which has been helping the dollar but our view is that this impressive run of data may be less so over the coming months as the payrolls tax, the sequester and rising gasoline prices eat into discretionary spending power.
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Forex Flash: US data may provoke a CAD reaction – TD Securities

The USD/CAD remains limited by the 1.0250/1.0315 range and broader signals from the FX market have been weak as well. “Today we finally get the first North American data release that could provoke a CAD reaction:  US retail sales”, wrote analysts Shaun Osborne and Greg Moore, pointing to a “slightly above consensus expectations for consumer activity in February and since positive US data is good for the USD now, that suggests USD/CAD would be supported by the release”.
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