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USD/BRL continued its upward trend, approaching the 6.0 mark. Luis Hurtado from CIBC Capital Markets sees political tensions and a dovish BCB to weigh on the Brazilian real. 

Read about last USD/BRL moves

Key quotes

“A Supreme Court investigation on President Bolsonaro and his family already caused the resignation of the former head of the federal police and the Minister of Justice Sergio Moro, via alleged political pressures by the president. Investigation leaks will continue to be harmful for those with long BRL positions.”

“We’ve revised our Selic rate forecast to 2.0%-2.25% by the end of 2020. The clear dovish stance by the BCB, despite larger fiscal risks, should also put pressure on the BRL in the short-term.”

“We revised our USD/BRL forecast for Q2 to 5.50.”