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6 Mar 2014
Latin America EM Express: Brazil's central bank open to another rate hike
FXStreet (Łódź) - The minutes from Brazil's central banks last monetary policy meeting on February 25-26 , and published today revealed that monetary policy committee (COPOM) is open to another rate hike to balance inflationary pressure resulting from currency depreciation in the shorter term.
In February the COPOM voted unanimously in favor of increasing the SELIC rate by 25bp to 10.75% from 10.5% after rising it by 50bps for six consecutive months.
Brazil's swap rates grew following the news on the plans of further tightening.
In the opinion of Gustavo Rangel from ING: “Market disappointment with the fiscal announcement, or a higher-than-expected CPI could however force COPOM to maintain an open door for hikes beyond April. Our assessment though is that, even in that case, April would be the last hike this year.”
Economic data
Colombian CPI data released on Thursday by the Banco de la Republica Colombia showed that on an annual basis inflation accelerated to 2.32% in February, from 2.13% in January. Market consensus pointed to less increase of 2.27%.
Technicals
The USD/BRLdaily FXStreet Trend Index is slightly bearish, with the OB/OS Index neutral. RSI is neutral at 36.3631 at the last close. Daily 2-StDev Volatility Bandwidth is expanding at 287 pips, with ATR (14) expanding at 261 pips. The 1D 200 SMA is down at 2.2920, while the 1D 20 EMA is at 2.3604.
The USD/MXN daily FXStreet Trend Index is also slightly bearish, with the OB/OS Index neutral. RSI is neutral at 48.2313 at the last close. Daily 2-StDev Volatility Bandwidth is shrinking at 375 pips, with ATR (14) shrinking at 972 pips. The 1D 200 SMA is at 13.0291, while the 1D 20 EMA is neutral at 13.2775.
In February the COPOM voted unanimously in favor of increasing the SELIC rate by 25bp to 10.75% from 10.5% after rising it by 50bps for six consecutive months.
Brazil's swap rates grew following the news on the plans of further tightening.
In the opinion of Gustavo Rangel from ING: “Market disappointment with the fiscal announcement, or a higher-than-expected CPI could however force COPOM to maintain an open door for hikes beyond April. Our assessment though is that, even in that case, April would be the last hike this year.”
Economic data
Colombian CPI data released on Thursday by the Banco de la Republica Colombia showed that on an annual basis inflation accelerated to 2.32% in February, from 2.13% in January. Market consensus pointed to less increase of 2.27%.
Technicals
The USD/BRLdaily FXStreet Trend Index is slightly bearish, with the OB/OS Index neutral. RSI is neutral at 36.3631 at the last close. Daily 2-StDev Volatility Bandwidth is expanding at 287 pips, with ATR (14) expanding at 261 pips. The 1D 200 SMA is down at 2.2920, while the 1D 20 EMA is at 2.3604.
The USD/MXN daily FXStreet Trend Index is also slightly bearish, with the OB/OS Index neutral. RSI is neutral at 48.2313 at the last close. Daily 2-StDev Volatility Bandwidth is shrinking at 375 pips, with ATR (14) shrinking at 972 pips. The 1D 200 SMA is at 13.0291, while the 1D 20 EMA is neutral at 13.2775.