USDBRL should reflect US data, IPCA-15, and the economic agenda in Congress.

Bullish factors

November IPCA-15 may slightly accelerate versus October, bringing some points of concern regarding inflation dynamics for the upcoming months and potentially weakening the real.

Bearish factors

The possibility of advancing important economic agendas for the government in the National Congress could reduce the perception of fiscal risks for Brazilian assets and strengthen the real.
Data for the American economy can reinforce the perception that the Federal Reserve will not raise interest rates further and contribute to the global weakening of the USD.

Our Brazil team provides regular weekly coverage of the Brazilian economy and the outlook for the Real, accessible by clicking the link in the banner above.

The week in review

The week was marked by reduced liquidity due to holidays in Brazil and the United States. Accordingly, the Brazilian currency fluctuated within narrow margins in a week with few relevant data.

The USDBRL ended the week lower, closing the session this Friday (24) at BRL 4.899, a weekly decrease of 0.1%, a monthly decline of 3.0%, and an annual reduction of 7.2%. The dollar index closed Friday's session at 103.3 points, a change of -0.5% for the week, -2.5% for the month, and 0.0% for the year.

USDBRL and Dollar Index (points)

Source: StoneX cmdtyView. Design: StoneX

HIGHLIGHT: Data on the American economy

Expected impact on USDBRL: bearish

The week will be relatively light regarding the data for the United States. It is worth highlighting the release of the Personal Consumption Expenditures (PCE) Price Index for October, concluding this month's round of indicators, with an expected performance very close to the Consumer Price Index (CPI), that is, a 0.1% hike in the overall index and a 0.2% hike in the core index, which excludes the more volatile components of food and energy. The reading should reinforce the perception that American interest rates are at their peak and corroborate a weakening of the American currency. Additionally, the Purchasing Managers' Index (PMI) for the industrial sector in November will be published by the ISM Institute, opening the round of data for November. The expectation is a rebound compared to the performance below expectations last month, going from 46.7 points in October to 47.6 points in November, remaining below the 50-point mark, in contraction territory.

Economic Agenda in Congress

Expected impact on USDBRL: bearish

This week, the progress of the government's economic agenda in the National Congress should also be highlighted. Disagreements over the insertion of a mandatory deadline for the payment of parliamentary amendments prevented the vote on the draft Budget Guidelines Law in the Joint Budget Committee last week, and the Finance Ministry must concentrate its efforts on moving forward with its consideration this week. In addition, there is the expectation of a vote on the bill to tax exclusive and offshore investment funds in the Federal Senate and the bill to review taxation on ICMS subsidies (incentives) in the Chamber of Deputies.

IPCA-15

Expected impact on USDBRL: bullish

The release of IPCA-15 for November is expected to show a slight increase compared to the previous reading, going from 0.21% in October to something close to 0.30% in November. Although fuel prices are slightly falling, food and airfare are expected to pressure the indicator. Additionally, the General Price Index - Market (IGP-M) will be published, allowing for a more updated reading of commodity prices, which experienced deflation between April and August and contributed to the recent stabilization of consumer prices.

Key Indicators

Sources: Central Bank of Brazil; B3; IBGE; Fipe; FGV; MDIC; IPEA and StoneX cmdtyView.

Analysis by: Leonel Oliveira Mattos (leonel.mattos@stonex.com), Alan Lima (alan.lima@stonex.com), and Vitor Andrioli (vitor.andrioli@stonex.com).

Translation by Rodolfo Abachi (rodolfo.abachi@stonex.com).

Financial editor: Paul Walton (paul.walton@stonex.com).

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.