Forex Market: USD/BRL daily trading forecast

Yesterday’s trade saw USD/BRL within the range of 2.5802-2.6193. The pair closed at 2.6081, gaining 0.24% on a daily basis.

At 9:36 GMT today USD/BRL was unchanged for the day to trade at 2.6082. The pair touched a daily low at 2.6078.

Fundamentals

United States

Producer prices

United States’ annualized producer price inflation probably slowed down to 1.3% in October, according to the median estimate by experts, from 1.6% in September. If so, this would be the lowest producer inflation since February, when the corresponding index (PPI) climbed at an annualized pace of 0.9%. This index reflects the change in prices of over 8 000 products, sold by manufacturers during the respective period. The Producer Price Index (PPI) differs from the Consumer Price Index (CPI), which measures the change in prices from consumer’s perspective, due to subsidies, taxes and distribution costs of different types of manufacturers in the country. The simple logic behind this indicator is that if producers are forced to pay more for goods and services, they are more likely to pass these higher costs to the end consumer. Therefore, the PPI is considered as a leading indicator of consumer inflation. Lower-than-expected producer prices would usually have a bearish effect on the greenback.

Nation’s annualized core producer price inflation, which excludes prices of volatile categories such as food and energy, probably decelerated to 1.5% in October from 1.6% in the prior month. If so, this would be the lowest annual rate since March, when core producer inflation was registered at 1.4%. This indicator is quite sensitive to changes in aggregate demand, thus, it can be used as a leading indicator for economy. However, because of its restrained scope, it is not suitable for future inflation forecasts. The Bureau of Labor Statistics is expected to report the official PPI performance at 13:30 GMT.

NAHB Housing Market Index

The National Association of Home Builders (NAHB) Housing Market Index probably rose to a reading of 55.0 in November from 54.0 in October. It is based on a monthly survey in regard to current home sales and expected sales in the coming six months. Values above the key level of 50.0 indicate that housing market conditions are good. Therefore, higher than projected readings would provide support to the US dollar. The official data is scheduled for release at 15:00 GMT.

Brazil

The Industrial Entrepreneur Confidence Index (ICEI) in Brazil probably improved to 46.6 in November, according to market expectations, from 45.8 in October. The latter has been the lowest index reading on record. The index is based on a survey that covers almost 2 500 business entities, operating in industries such as construction, mining and manufacturing. The survey is conducted by phone and concentrates on production trends in recent months, order books, export order books, stocks and production expectations. Confidence is measured on a scale of 0 to 100, where a reading of 50 signifies neutrality, zero suggests extreme lack of confidence, while 100 – extremely high confidence. In case the gauge demonstrated a larger improvement than anticipated, this might have a limited bullish effect on the real. Brazils Confederacao Nacional da Industria (CNI) is to release the official index reading at 15:00 GMT.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 2.6025. In case USD/BRL manages to breach the first resistance level at 2.6249, it will probably continue up to test 2.6416. In case the second key resistance is broken, the pair will probably attempt to advance to 2.6640.

If USD/BRL manages to breach the first key support at 2.5858, it will probably continue to slide and test 2.5634. With this second key support broken, the movement to the downside will probably continue to 2.5467.

The mid-Pivot levels for today are as follows: M1 – 2.5551, M2 – 2.5746, M3 – 2.5942, M4 – 2.6137, M5 – 2.6333, M6 – 2.6528.

In weekly terms, the central pivot point is at 2.5875. The three key resistance levels are as follows: R1 – 2.6444, R2 – 2.6869, R3 – 2.7438. The three key support levels are: S1 – 2.5450, S2 – 2.4881, S3 – 2.4456.