Brazilian Real under fire - USDBRL Macro Outlook

The Brazilian Real remains under fire due to a weakening commodity outlook, continued coronavirus concerns and impacts on LATAM/emerging market assets, revisions in inflationary outlook (down to 3.25% for 2020) and subsequent shifts in future monetary stimulus, high gross debt to GDP (~80%) and continued capital outflow from asset markets.

All within a risk-off climate supporting dollar bids.

We continue to see compelling evidence for a leg higher from a technical perspective with price supported by its 52-Week Moving Average, completion of the first corrective leg and an extension into our macro swing target of 5.00xx. Around a +16.00% move on the cards from here.

We have added buyside exposure across both our macro and directional portfolios.

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Until next time,

Portier Capital
Macro Strategy & Portfolio Management