Brazilian real - Economic data and FX

FX Risk Management Programme
Economic Data and Forecast USDBRL
Confidential – Do not distribute without written permission from Deaglo
Nov, 2022

18% Historical Annual volatility – One of the most volatile currency
in LatAm
ARS 2.3%
COP 16.0%
CLP 20.3%
MXN 10.5%
PEN 8.7%
BRL 18.0%
Source: Deaglo Platform
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Median spot rate is 5.1849/USD in 12-month period
Source: Deaglo Platform
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DMA 50, 100 – Next resistance levels
RSI – Near to oversold level
Source: Bloomberg
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Low Correlation between Dollar Index and USDBRL spot rate
Dollar Index
Correl = 63.0%
Source: Bloomberg
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FX Movement – BRL gained almost 5% against the USD in the last 12
months
Source: Deaglo Platform
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Ibovespa and BRL 1M Vol hit a historic maximum levels
Source: Bloomberg
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Currency USDBRL Volatility (%)
High
Current
Low
Source: Bloomberg
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Brazil – Credit Default Swaps 5Y – Risco País
Dilma Rousseff
Impeachment
High
Avg.
Covid Outbreak
Low
Source: Bloomberg
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Positive Risk Reversal (higher Call vol), market participants are betting
on a depreciation of the BRL
Source: Bloomberg
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US$ FX Rates: Americas – MXN outperforms
Source: Yardeni Research
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Oil prices retreat, but still at highest levels
Source: Yardeni Research
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Agricultural and Metal commodities drop, but still at highest levels
Source: Yardeni Research
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Market continues to price higher interest rates, but domestic prices
retreat
Source: Bloomberg
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Brazil Currency Trade and Investment Flows Balance – 2022 presents a
net inflow, but historical data is net outflow
Source: Bloomberg
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Main economic indicators show a bullish BRL impact
CONSUMO Ref. Atual Anterior Impacto USDBRL Próximo Release
Vendas no Varejo MoM Sep 1.10% -0.10% Positivo 08-Dec-22
Confianca dos Cons. MoM Nov 85.3 88.6 Negativo 26-Dec-22
MERCADO DE TRABALHO
Taxa de Desemprego QoQ Q3/22 8.90% 9.90% Positivo -
IPCA YoY Oct 6.47% 7.17% Positivo 09-Dec-22
IGP-M YoY Oct 6.52% 8.25% Positivo 29-Nov-22
INPC YoY Oct 6.46% 7.19% Positivo -
ATIVIDADE ECONOMICA
PIB QoQ Q2/22 1.20% 1.00% Positivo 01-Dec-22
PMI Serviços Monthly Oct 54 51.9 Positivo 05-Dec-22
PMI Indústria Monthly Oct 50.8 51.1 Negativo 01-Dec-22
INDICADORES DE MERCADO
Bovespa Weekly 11/23/2022 108,841 108,870 Negativo -
Título Público (10y) - NTN-F Weekly 11/23/2022 13.79% 13.47% Negativo -
Positivo 6
Negativo 5
Source: Bloomberg
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US Consumer Prices at historical highs
Source: Bloomberg
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Market players are betting in 50bps hike in Dec, 14th
Source: Bloomberg
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USDBRL Forecast
Contributor
As of
Bloomberg Composite
11/24/22
Brazilian Real Spot Q4 22 Q1 23 Q2 23 Q3 23 2023 2024 2025 2026
Forecast 5.32 5.25 5.25 5.16 5.16 5.08 4.86 -- --
Forward 5.39 5.42 5.52 5.62 5.73 5.81 6.26 6.8 7.37
Source: Bloomberg
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It all starts with currency...
But will end with revolutionizing the way
international investments are made, for anyone
that is contemplating one.
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