9 Apr 2014
Latin America EM Express: Brazilian inflation grows more than expected in March
Consumer prices in Brazil rose to the highest level in 11 years by 0.92%, increasing the possibility that the country's central bank carries out another rate hike at the upcoming monetary policy meeting.
The CPI acceleration, considerably above forecasts, also could weigh against President Dilma Rousseff's reelection in October. She already saw support wane from 44% in February to 38% this month. The Brazilian real strengthened on the news, as investors believe that markets will gain from Rousseff's leaving the office.
Economic data
On Tuesday and Wednesday a slew of March CPI data was released in Latin America. Chilean month-on-month inflation came in slightly above consensus of 0.7% at 0.8% and up from the previous 0.5%. Core CPI was at 0.7%, following a 0.4% reading.
Brazil's IPCA inflation, released by the Instituto Brasileiro de Geografia e Estatistica grew 0.92% in March, up from the 0.69% rise in February. On an annual basis CPI increased 6.15%, following +5.68% and above forecasts of 6.08%.
Mexico's 12-month inflation slowed down to 3.76% in March from 4.23% in February. Core inflation was at 0.21%, down from 0.28% and Headline inflation at 0.27%, following a 0.25% reading.
Technicals
The USD/BRL rose by 0.82% to 2.2129 on Wednesday. The daily FXStreet Trend Index was slightly bearish, with the OB/OS Index extremely oversold. RSI sat at 22 at the last close, and has reached 61 so far today. Daily 2-StDev Volatility Bandwidth was expanding at 478 pips, with ATR (14) at 312 pips. The 1D 200 SMA was at 2.3078 , while the 1D 20 EMA was at 2.2837.
The USD/MXN climbed 0.13% to 13.0654. The daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI sat at 41 at the last close, and has headed higher to 69 so far today. Daily 2-StDev Volatility Bandwidth was expanding at 884 pips, with ATR (14) at 886 pips. The 1D 200 SMA was at 13.0533, while the 1D 20 EMA was at 13.1201.
The CPI acceleration, considerably above forecasts, also could weigh against President Dilma Rousseff's reelection in October. She already saw support wane from 44% in February to 38% this month. The Brazilian real strengthened on the news, as investors believe that markets will gain from Rousseff's leaving the office.
Economic data
On Tuesday and Wednesday a slew of March CPI data was released in Latin America. Chilean month-on-month inflation came in slightly above consensus of 0.7% at 0.8% and up from the previous 0.5%. Core CPI was at 0.7%, following a 0.4% reading.
Brazil's IPCA inflation, released by the Instituto Brasileiro de Geografia e Estatistica grew 0.92% in March, up from the 0.69% rise in February. On an annual basis CPI increased 6.15%, following +5.68% and above forecasts of 6.08%.
Mexico's 12-month inflation slowed down to 3.76% in March from 4.23% in February. Core inflation was at 0.21%, down from 0.28% and Headline inflation at 0.27%, following a 0.25% reading.
Technicals
The USD/BRL rose by 0.82% to 2.2129 on Wednesday. The daily FXStreet Trend Index was slightly bearish, with the OB/OS Index extremely oversold. RSI sat at 22 at the last close, and has reached 61 so far today. Daily 2-StDev Volatility Bandwidth was expanding at 478 pips, with ATR (14) at 312 pips. The 1D 200 SMA was at 2.3078 , while the 1D 20 EMA was at 2.2837.
The USD/MXN climbed 0.13% to 13.0654. The daily FXStreet Trend Index was slightly bearish, with the OB/OS Index neutral. RSI sat at 41 at the last close, and has headed higher to 69 so far today. Daily 2-StDev Volatility Bandwidth was expanding at 884 pips, with ATR (14) at 886 pips. The 1D 200 SMA was at 13.0533, while the 1D 20 EMA was at 13.1201.