29 Apr 2014
Latin America EM Express: Poll shows that support for Brazil's president is waning ahead of elections
FXStreet (Łódź) - A poll released on Tuesday by MDA showed that the support of Brazilian voters for president Dilma Rousseff has fallen to 37% from 43.7% seen in February. The deterioration of confidence was mainly caused by the discontent with Rouseff administration's economic policy, which resulted in stagnation of activity, and her alleged involvement in the Petrobras corruption scandal.
Furthermore, following the release of Brazil's lower than expected inflation numbers on Tuesday, the country´s swap rates jumped to a one-week high, by three basis points to 11.92%.
“We think inflation is still the key variable for Brazil, which impacts growth, monetary and FX policy,” BBH Global Currency Strategy Team state. “Next COPOM meeting is May 28, and there is still a lot of data to come out ahead of that. BCB decision not to fully roll over swaps on Friday suggests further BRL gains below 2.20 are not desirable.”
Meanwhile, ahead of the Fed interest decision announcement on Wednesday, Mexican bonds dropped to a three-week low on expectations that the FOMC will carry out another 10 billion dollar QE reduction.
Economic data
Brazil's Wholesale Inflation Index, released by the Fundação Getulio Vargas on Tuesday, showed a slowdown to 0.78% in April from 1.67% in March. Brazilian Bank Lending growth increased by 1% in March, up from the 0.6% rise registered in February.
On Monday Mexico´s preliminary data pointed to a USD1.027B trade surplus in March, up from USD0.976B seen in February but below consensus of USD1.600B. Seasonally adjusted trade balance numbers showed that the February 0.431B surplus shifted to a USD-0.373B deficit in March.
Colombia's USD 157.4M trade surplus recorded January moved to a USD-505.6M deficit, the country's Departamento Administrativo Nacional de Estadística (DANE) said on Monday.
Also on Monday Argentina informed that annual Retail Sales climbed 29.4% in March, down from the 32.3% increase in February but above expectations of 27% growth.
Technicals
The Brazilizn real rose 0.3% to 2.2169 against the greenback on inflation data released on Tuesday. Currently USD/BRL is down 0.46% at 2.2213.
On Monday the USD/BRL daily FXStreet Trend Index was slightly bullish, with the OB/OS Index neutral. RSI was at 42 at the last close, and has climbed to 46 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 238 pips, with ATR (14) expanding at 235 pips. The 1D 200 SMA was at 2.3063, while the 1D 20 EMA was at 2.2437.
USD/MXN was falling 0.24% to 13.0891 at the moment of writing.
Furthermore, following the release of Brazil's lower than expected inflation numbers on Tuesday, the country´s swap rates jumped to a one-week high, by three basis points to 11.92%.
“We think inflation is still the key variable for Brazil, which impacts growth, monetary and FX policy,” BBH Global Currency Strategy Team state. “Next COPOM meeting is May 28, and there is still a lot of data to come out ahead of that. BCB decision not to fully roll over swaps on Friday suggests further BRL gains below 2.20 are not desirable.”
Meanwhile, ahead of the Fed interest decision announcement on Wednesday, Mexican bonds dropped to a three-week low on expectations that the FOMC will carry out another 10 billion dollar QE reduction.
Economic data
Brazil's Wholesale Inflation Index, released by the Fundação Getulio Vargas on Tuesday, showed a slowdown to 0.78% in April from 1.67% in March. Brazilian Bank Lending growth increased by 1% in March, up from the 0.6% rise registered in February.
On Monday Mexico´s preliminary data pointed to a USD1.027B trade surplus in March, up from USD0.976B seen in February but below consensus of USD1.600B. Seasonally adjusted trade balance numbers showed that the February 0.431B surplus shifted to a USD-0.373B deficit in March.
Colombia's USD 157.4M trade surplus recorded January moved to a USD-505.6M deficit, the country's Departamento Administrativo Nacional de Estadística (DANE) said on Monday.
Also on Monday Argentina informed that annual Retail Sales climbed 29.4% in March, down from the 32.3% increase in February but above expectations of 27% growth.
Technicals
The Brazilizn real rose 0.3% to 2.2169 against the greenback on inflation data released on Tuesday. Currently USD/BRL is down 0.46% at 2.2213.
On Monday the USD/BRL daily FXStreet Trend Index was slightly bullish, with the OB/OS Index neutral. RSI was at 42 at the last close, and has climbed to 46 so far today. Daily 2-StDev Volatility Bandwidth was shrinking at 238 pips, with ATR (14) expanding at 235 pips. The 1D 200 SMA was at 2.3063, while the 1D 20 EMA was at 2.2437.
USD/MXN was falling 0.24% to 13.0891 at the moment of writing.