Forex Market: USD/BRL daily trading forecast

Yesterday’s trade saw USD/BRL within the range of 2.3871-2.4145. The pair closed at 2.4118, gaining 0.56% on a daily basis.

At 8:00 GMT today USD/BRL was up 0.03% for the day to trade at 2.4128. The pair touched a daily high at 2.4130 at 7:58 GMT.

Fundamental view

United States

Sales of new single-family homes probably climbed 4.4% to the seasonally adjusted annual rate of 430 000 during August compared to a month ago, according to market expectations. The index of new home sales dropped 2.4% to the annual rate of 412 000 in July from 422 000 in June.

There are several points to watch out for when interpreting the New Home Sales numbers. First of all, the statistics does not record any houses that are not going to be sold immediately. As an example, the case when a house is commissioned to be built on an existing plot of land that the purchaser owns.

Second, the statistics are taken at the point where a customer has signed a sales contract or has put a deposit down. At this point the house can be at any stage of construction.

Third, the sales figures are not adjusted to take into account the sales contracts, which are eventually canceled by the builder or the customer. However, the same house is not included in any subsequent count when it is eventually sold to another customer.

This report has a significant influence on the Forex market, because increasing new home sales can lead to a rise in consumption, for example. The new home sales index is also an excellent indicator of any economic downturns or upturns due to the sensitivity of consumers income. When, for instance, new home sales drop over several months, this usually is a precursor to an economic depression.

Therefore, in case the index rose more than anticipated, this would usually boost demand for the greenback. The US Census Bureau is to report the official figure at 14:00 GMT.

Brazil

The deficit on Brazilian current account probably shrank to 5.25 billion USD in August from 6.02 billion USD in July. Nations current account produced a record-high deficit at the amount of 11.529 billion USD in January this year.

The current account reflects the difference between a nation’s savings and its investments. It is the sum of the balance of trade, net current transfers (cash transfers) and net income from abroad (earnings from investments made abroad plus money sent by individuals working abroad to their families back home, minus payments made to foreign investors).

A current account surplus indicates that a country’s net foreign assets have increased by the respective amount, while a deficit suggests the opposite. A country with a surplus on its current account is considered as a net lender to the rest of the world, while a current account deficit puts it in the position of a net borrower. A net lender is consuming less than it is producing, which means it is saving and those savings are being invested abroad, or foreign assets are created. A net borrower is consuming more than it is producing, which means that other countries are lending it their savings, or foreign liabilities are created. Therefore, an expanding surplus or a contracting deficit on the current account of a nation usually has a bullish effect on its currency.

Banco Central do Brasil is expected to release the official data at 13:30 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 2.4045. In case USD/BRL manages to breach the first resistance level at 2.4218, it will probably continue up to test 2.4319. In case the second key resistance is broken, the pair will probably attempt to advance to 2.4492.

If USD/BRL manages to breach the first key support at 2.3944, it will probably continue to slide and test 2.3771. With this second key support broken, the movement to the downside will probably continue to 2.3670.

The mid-Pivot levels for today are as follows: M1 – 2.3721, M2 – 2.3858, M3 – 2.3995, M4 – 2.4132, M5 – 2.4269, M6 – 2.4406.

In weekly terms, the central pivot point is at 2.3566. The three key resistance levels are as follows: R1 – 2.3976, R2 – 2.4270, R3 – 2.4680. The three key support levels are: S1 – 2.3272, S2 – 2.2862, S3 – 2.2568.