Weekly Asset Heatmap

Weekly Asset Heatmap: Brazil

The real could significantly depreciate against the dollar in the next month.

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A Predata signal that anticipates big, unexpected depreciations in the real hit a yearly high, strongly suggesting a big upward move in the USD/BRL pair over the next 30 days.

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Salient threads in the digital debate driving this movement include:
  • Joesley Batista, co-owner of JBS SA, the world's largest meat processing company, was arrested on Sunday by order of the Supreme Court after a leaked recording suggested he had withheld information from federal prosecutors in his plea deal. Batista had avoided prosecution for corruption by testifying to bribing several politicians, including President Michel Temer.
  • JBS sold a subsidiary in the UK for $1 billion, as it sheds assets to deal with upcoming debt payments and the corruption case.
  • The volume of cash ($16.4 m) seized by the Federal Police in an apartment connected to former minister Geddel Vieira Lima was so large that seven money-counting machines took more than five hours to complete the counting.
  • The interminable political crisis discrediting the established political class has caused a deluge of wannabe political parties to seek political status in next year's general election.
Additionally, Predata's signal for measuring volatility related to Brazil's regulatory bureaucracy spiked in recent days.
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At the time of writing, the USDBRL was trading at 3.1044 with a 1-month forward rate of 3.116.

The Central Bank of Brazil next meets on October 25.