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Analysts at Rabobank point out that Brazilian assets had a mixed last week as the Copom statement brought a neutral BCB tone and forward guidance.

Key Quotes

“The authority continues to signal that Selic rate will likely remain on hold as long as the weak BRL does not derail expectations (and balance of risks) for a target-consistent inflation path.”

“We stick to the view that the (temporary) effects from the BCB interventions explain most of the gap between the actual FX rate from our short-term fair value estimate for USD/BRL, currently running at 4.00-4.10.”

“Amid a slew of economic data, the week features important monetary policy events such as the Copom minutes (Tue) and the 2Q18 inflation report (Thu). Both may provide further information/hints on the BCB’s scenario assessment, inflation forecasts and policy guidance. Another relevant event is the CMN (Monetary Council) meeting on Tuesday, which will reaffirm the inflation target for 2019 and 2020 (center at 4.25% and 4.00%, respectively) and establish the goal for 2021.”

“In politics, the highlight is Tuesday’s ruling by the second team of the Supreme Court of an appeal (for a suspension of sentence) from former president Luiz Inácio “Lula” da Silva.”