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8 Sep 2015
USD/BRL expected to break above 4.00 – Rabobank
FXStreet (Edinburgh) - Strategist at Rabobank Christian Lawrence believes the pair could surpass the critical 4.00 mark in the medium term.
Key Quotes
“Market-based risk metrics continue to highlight the deteriorating economic and political backdrop with the five year CDS climbing from 250bps in early July to 350bps by the end of August”.
“This came in tandem with the move higher in USD/BRL which saw the pair break 3.68 for the first time since 2003”.
“Given our long held bullish USD and bearish BRL view, USD/BRL has been moving broadly in line with our forecasts”.
“We have elected to pencil in a move north of USD/BRL 4.00 next year on the increasing likelihood of a sovereign downgrade to ‘junk’ status and it is fair to say that we could reach that level much quicker should a number of potential risks materialise in the near term”.
Key Quotes
“Market-based risk metrics continue to highlight the deteriorating economic and political backdrop with the five year CDS climbing from 250bps in early July to 350bps by the end of August”.
“This came in tandem with the move higher in USD/BRL which saw the pair break 3.68 for the first time since 2003”.
“Given our long held bullish USD and bearish BRL view, USD/BRL has been moving broadly in line with our forecasts”.
“We have elected to pencil in a move north of USD/BRL 4.00 next year on the increasing likelihood of a sovereign downgrade to ‘junk’ status and it is fair to say that we could reach that level much quicker should a number of potential risks materialise in the near term”.