USD/BRL to test 3.50 in a 12-month view – TDS

FXStreet (Edinburgh) – Strategists at TD Securities expect the Brazilian real to depreciate towards the 3.50 area in a year’s time.

Key Quotes

“Broad based weakness from leading indicators suggests Brazil is set for a contraction in excess of 1 percent this year after stagnating in 2014”.

“Meanwhile, inflation continues to grind higher as a result of administered price hikes, demand-supply imbalances and currency weakness”.

“In Mexico, the picture is rosier, but we see a risk that growth may disappoint there as well with government spending cuts to be implemented in H2 2015”.

“In light of recent BRL resilience, we now expect a softer depreciation path than previously thought. USDBRL still to peak at 3.50, but one quarter later in Q2 2016, with milder appreciation in the two final quarters of next year”.

“Wary of the possibility of lower-than-expected growth in Mexico and the MXN proxy-hedge status at a time of likely rising vol, we see USDMXN higher than prior forecast throughout the forecasting period”.

Strategists at TD Securities expect the Brazilian real to depreciate towards the 3.50 area in a year’s time…

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