Forex Market: USD/BRL daily trading forecast

Friday’s trade saw USD/BRL within the range of 2.4085-2.4436. The pair closed at 2.4200, losing 0.34% on a daily basis.

At 9:21 GMT today USD/BRL was down 0.01% for the day to trade at 2.4197. The pair touched a daily low at 2.4181 at 5:55 GMT.

Fundamental view

United States

Personal Spending and Income

Personal spending in the United States probably rose 0.5% in August compared to a month ago, according to market expectations, while personal income was probably up 0.3%. Spending dropped 0.1% in July, which has been the first decline in six months. At the same time, personal income increased 0.2% (or 28.6 billion USD) in July, while disposable personal income (DPI) rose 17.7 billion USD (or 0.1%). Private wages and salaries increased 12.9 billion USD in July, in comparison with an increase of 25.6 billion USD in June. Higher than expected rates of increase imply good employment conditions and, therefore, are dollar positive. The Bureau of Economic Analysis is to publish the official figures at 12:30 GMT.

Pending Home Sales

The index of pending home sales in the United States probably decreased 0.6% during August compared to July, when sales rose 3.3%. In annual terms, pending home sales fell 2.1% in July, or the least since November 2013.

When a sales contract is accepted for a property, it is recorded as a pending home sale. As an indicator the index provides information on the number of future home sales, which are in the pipeline. It gathers data from real estate agents and brokers at the point of a sale of contract and is currently the most accurate indicator regarding US housing sector. It samples over 20% of the market. In addition, over 80% of pending house sales are converted to actual home sales within 2 or 3 months. Therefore, this index has a predictive value about actual home sales.

Although there are some cancellations, there are not enough for the data to be skewed one way or another. The base value of the index is equal to 100, while the base year is 2001, when there has been high activity in the US housing sector.

The National Association of Realtor’s (NAR) will release the official index reading at 14:00 GMT. In case pending home sales dropped more than anticipated, this would have a bearish effect on the greenback.

Brazil

At 14:00 GMT the Confederacao Nacional da Industria (CNI) is to report on consumer confidence in Brazil for September. In August the National Index of Consumer Expectation (INEC) came in at a reading of 108.3, down from 109.5 in July.

The index is based on a survey, covering approximately 2 000 individuals randomly chosen in the streets of Brazilian cities. Respondents give their opinion regarding their own current financial capabilities and on their expectations about inflation, unemployment, wages and major purchases during the next six months. The consumer confidence index is a fixed base indicator, with its current base year being 2001. Readings of 100.0 imply neutrality in consumer sentiment. Values above 100.0 are indicative of increasing optimism, while values below 100.0 signal low expectations.

In case the index value continued to decrease, this would have a bearish effect on the local currency, as lower confidence is related to lesser willingness to spend.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 2.4240. In case USD/BRL manages to breach the first resistance level at 2.4396, it will probably continue up to test 2.4591. In case the second key resistance is broken, the pair will probably attempt to advance to 2.4747.

If USD/BRL manages to breach the first key support at 2.4045, it will probably continue to slide and test 2.3889. With this second key support broken, the movement to the downside will probably continue to 2.3694.

The mid-Pivot levels for today are as follows: M1 – 2.3792, M2 – 2.3967, M3 – 2.4143, M4 – 2.4318, M5 – 2.4494, M6 – 2.4669.

In weekly terms, the central pivot point is at 2.4087. The three key resistance levels are as follows: R1 – 2.4549, R2 – 2.4897, R3 – 2.5359. The three key support levels are: S1 – 2.3739, S2 – 2.3277, S3 – 2.2929.