A number of economic indicators, including currency and stock market futures contracts, gave different signals as traders awaited Petroleo Brasileiro’s sale of shares worth approximately $25 billion next week. The state-run oil company, more commonly known as Petrobras, is planning what Bloomberg says is the biggest share sale in the Western Hemisphere in at least a decade.
The Brazilian currency, the real, rose throughout the week but fell slightly on Friday as traders anticipated the central bank of Brazil would raise interest rates to stave off potential inflation.
Fears of currency inflation hold particular weight in Brazil, which endured wild swings in the value of its currency after emerging from military rule in the 1980’s. The rate of inflation soared past 1,000 percent at times, and the currency was repeatedly devalued and manipulated in efforts to tame the economy.
Eventually, the so-called plano real restored economic order by creating a new currency called the ‘real’, and Brazil grew rapidly over the past 15 years on the strength of its petroleum, manufacturing and agricultural exports.
However, Brazil’s economic future is closely tied to those of major commodities and energy consumers like China and the United States, and many fear that without sustained Chinese growth, Brazil’s domestic demand will not be enough to keep the country’s economy on an even keel.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.