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U.S. DOLLAR / BRAZILIAN REAL REFERENCE RATE

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USDBRX trade ideas

ridethepig | BRL 2020 Macro MapThis train is picking up speed and as most of those who follow the Brazilian chart updates will know there is now momentum via Bolsonaro's pension reform. This is giving consumers the ability to drive growth into 2020 and beyond via things like credit and the appropriate monetary policy. Inflation is still coming down which means CB can keep lower rates, this will provide profit taking and reloading opportunities in 2020. For those really wanting to dig deeper into the flows, retail housing market will be a useful gauge to the next chapter as it will highlight the pace / acceleration of the pick-up. On the technical side, a very clean 5 wave sequence over a multi year period. What we are trading here is the ABC corrective leg via Brazil momentum and capturing a double whammy with USD devaluation. Here tracking 3.70x as the level in play for USDBRL in 2020 macro flows, I also favour BRL on other crosses in particular versus MXN: Thanks for keeping the support coming with likes, comments, questions and etc. We can open the Brazil conversation here for the year ahead. For those wanting to dig deeper with the 2020 strategies I have attached them in the related charts.
Short
by ridethepig
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USD/BRL - WEEK CHARTHi, today we are going to talk about USDBRL and its current landscape. The emerging markets today can face an increase of volatility and perhaps pessimism as Trump's stated that will reinstate Steel and Aluminum tariffs for Brazil and Argentina since, in his perspective, both countries are devaluating their currencies to be "unfairly" competitive in the sale of agricultural goods, which is harmful to U.S farmers. We must remember that since the beginning of the Trade War, China has stepped into the gas pedal in buying Brazilian agricultural goods, and the Brazilian currency has reached new record lows against the U.S dollar after falling more than 8% this year, which theoretically bases Trump's argument. This could be bad news for the market if imply a new Trade War front against these Latam countries that don't have China firepower to sustain a tariff battle against the U.S. Trump's movement could be interpreted as an endeavor to take these competitors of the road, to try to suffocate China's lifeline of agricultural goods, and maybe force them to become more friendly with the idea of expanding their spending on U.S agrarian goods. For Brazil, it's tough news to swallow since its foreign policy during Bolsonaro mandate, has been based in bending the knee for the Trump, without asking nothing meaningfully in return, which has already pushed away other emerging countries from had a closer relationship with the country. Now Brazil has a hard lesson to learn that in the sovereignty game if you behave like a vassal, you can be discarded like one. For the future perspective, the dilemma is that if the Brazilian government intervene in its currency and stop or even reverse the devaluation, they might hurt their support among Brazilian farmers that are the bedrock of this government, but if they keep the devaluation U.S could impose another round of tariffs and push the country to a brink of an economic crisis, now it’s up to Bolsonaro administration to rule the fate of the country, since Trump isn't to going to show any mercy in his strategy to be re-elected. Thank you for reading and leave your comments if you like. To have access to our exclusive contents, join the Traders Heaven today! Link Below. Disclaimer: All content of Golden Dragon has only educational and informational purposes, and never should be used or take it as financial advice.
by Igor-Silva
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