The Brazilian real fell from its two-week height on Thursday against the U.S. dollar after Moody's Investors Service slashed the credit rating of the South American nation, Bloomberg reports.
The credit rating of the country hosting Latin America's largest economy dropped to stable from positive because of growing debt and the reduced pace of growth. The Banco Central do Brazil cut this year's economic growth outlook this week to 2.5 percent from 2.7 percent. The Wall Street Journal reports investors are growing increasingly concerned about the impact of the government shutdown in the U.S.
"People in the market think BRL2.20 to BRL2.30 is the range the central bank is shooting for these days, so when the real gets below BRL2.20, company treasuries start buying to stock up on dollars to make their payments abroad," director Luiz Carlos Baldan with Fourtrade brokerage in Sao Paulo told The Wall Street Journal on Thursday. "The big worry is how much the situation there will affect the economy in the U.S. and in Brazil."
The currency of the South American nation dropped 0.3 percent against the world's reserve currency on Thursday after touching its top value since September 18.
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.
