Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
EUR/USD continues to trade in a relatively tight channel below 1.0750 on Friday as investors refrain from committing to large positions. The US Dollar struggles to find demand ahead of April PCE inflation data, which could influence the market pricing of the next Fed decision.
GBP/USD is holding its recovery gains toward 1.2350 after the UK Retail Sales data came in mixed for April. Cable is advancing as the US Dollar is losing ground amid a correction alongside the US Treasury yields. Focus now shifts toward the US PCE inflation data.
Brazil’s latest government data indicates that the April Current Account registered at -1.68 billion US dollars, significantly lower than the forecast of -0.25 billion.
The devastating economic impact of the Coronavirus pandemic has hit the Brazilian economy hard, and April’s Current Account (CA) is just the latest statistic to reflect this. Brazil, which is Latin America’s largest economy, saw its annual CA dip by -5.1 billion US dollars over March. Furthermore, this worse than expected bearish performance marks the worst monthly CA since March of last year.
Much of this can be attributed to a decline in exports to foreign markets during the early stages of the pandemic. Business activity across the country has ground to a halt while the world scrambles to contain the virus, resulting in a significant downturn of Brazil’s foreign trade. As a result, the country’s net service revenues, which comprise much of the CA, fell by -2.2 billion US dollars during April.
Analysts and economists alike have pointed to the need for more fiscal and monetary stimulus measures in order to address the decline in economic activity and support the Brazil’s recovery. The government, however, is constrained by limited resources, especially since much of the stimulus measures deployed prior to the pandemic has already pushed unemployment levels up and increased the government’s debt burden.
The central bank has responded by cutting the interest rate by 1.5% during this month instead of the 3% initially expected. However, this may not be enough to contain the economic fallout of the coronavirus. Brazil is likely to experience further downward pressure on the CA in the coming months as global economic activities remain mired in the grips of the pandemic.