Quarterly Commodities Outlook is available for free now. Download your report →
By: StoneX Intelligence Brazil, StoneX Intelligence Brazil
Uncertainties and disagreements in important fiscal and monetary policy decisions by Lula's Administration cause exacerbated volatility and widen investors' perception of risks, potentially weakening the BRL.
Talk of Federal Reserve officials in defense of maintaining a tight monetary tightening to regain price stability tends to reduce appetite for risky assets and strengthen the US currency.
Higher-than-expected readings for US economic indicators could reinforce fears that inflation will stay elevated longer in the country and the Federal Reserve will need to maintain its monetary tightening for longer, strengthening the US currency.
Positive foreign exchange flows, resulting from the high foreign appetite for Brazilian assets and generation and surplus trade balances, strengthen the BRL.
Higher-than-expected readings for Brazilian economic indicators may reinforce foreign appetite for Brazilian assets and contribute to the BRL appreciation.
The USDBRL ended Friday's (24) session at BRL 5.199, a variation of +0.7% in the week, +2.4% in the month and -1.5% in the year. The dollar index closed the session quoted at 105.1 points, an increase of 1.3% in the week, 3.1% in the month and 1.8% in the year. The week, shortened by holidays in the United States and Brazil, was marked by an empty agenda and the release of US economic data that reinforced the interpretation that the inflationary challenge is far from being overcome and the Federal Reserve (Fed) will still need to maintain its tight monetary policy for an extended period.
Impact on USDBRL: bullish
This week, the focus should be on the dispute between internal wings of the federal government on important fiscal and monetary policy decisions. Firstly, there is uncertainty about the taxation on gasoline and hydrous ethanol, even though the Provisional Measure that extended its exemption ends next Tuesday (28). While the Ministry of Finance argues that taxes should be re-imposed immediately, other authorities advocate extending the exemption until April. On Thursday and Friday of last week (February 23 and 24), the President of Brazil, Luis Inácio Lula da Silva, had an agenda with the president of Petrobras, Jean Paul Prates, the Minister of Mines and Energy, Alexandre Silveira, the Executive Secretary of the Treasury, Gabriel Galípolo, and the Minister of the Civil House, Rui Costa. The taxation will bring inflationary impacts, either in March or April. Still, the exemption extension harms public sector revenue and may convey a message of little concern with fiscal sustainability purely out of political desire. According to the Treasury's calculations, the PIS/Cofins exemption alone costs the public coffers BRL 28.9 billion monthly.
Additionally, on Tuesday (28), the term of office of the Central Bank's Monetary Policy and Supervision directors, namely Bruno Serra Fernandes and Paulo Souza, will end. Amidst a recent context of friction between the Executive Branch and the Central Bank (despite the recent truce during Carnival week), the choice of the new Monetary Policy director worries analysts since it is a position with, in theory, responsibilities and the ability to influence the path of the basic interest rate (Selic) for the next four years. Serra, in turn, has already shown himself willing to remain interim until Congress approves the next candidate.
Impact on USDBRL: bullish
Last week, the publication of the minutes of the Federal Open Market Committee's (FOMC) monetary policy decision caught investors' attention, especially because of what the document did not say. Immediately after the Committee decided to reduce the pace of interest rate hikes on February 1 from a 0.50 p.p. adjustment in December to 0.25 p.p., Fed Chairman Jerome Powell justified the measure by mentioning "disinflation" or "disinflationary process" 15 times in his press conference. The minutes of the same decision, released on Wednesday (22), did not mention any of the terms even once. After the sequence of higher-than-expected economic indicators for January, some analysts question the decision taken by the FOMC as premature, suggesting that the Committee should have kept the interest rate hike at 50 basis points in the February decision and, they argue on raising the adjustment to 0.50 p.p. in March possibly. In this sense, it will be important to observe the comments of the authorities that make up the Federal Reserve and their perceptions about the situation in the country and the most appropriate strategy for American interest rates. Fed Board of Governors member Philip Jefferson, Fed Board of Governors member Christopher Waller, Atlanta Fed President Raphael Bostic, Fed Board of Governors member Michelle Bowman, and Richmond Fed President Tom Barkin are scheduled to speak this week.
Impact on USDBRL: bullish
US economic indicators for January brought several surprises for investors, generally beating expert estimates: job creation, services Purchasing Managers' Index (PMI), retail sales, and inflationary metrics such as the Consumer Price Index (CPI), Producer Price Index (PPI), and Personal Consumption Expenditures (PCE). This outlook has renewed fears that the country's price acceleration will remain widespread and persistent for longer than anticipated, which would require tighter and more prolonged monetary tightening by the Federal Reserve. The risks are more tilted to the inflationary upside at the moment.
Impact on USDBRL: bearish
This week, the Brazilian Institute of Geography and Statistics (IBGE) publishes the 2022 Gross Domestic Product result. The average estimates indicate a 2.9% expansion in four accumulated quarters but a 0.2% retraction in the quarterly comparison. Estimates for 2023 also indicate a slowdown in growth, totaling only 0.8% year-to-date. In addition, data for the labor market in December will be released as public finance indicators for January.
Impact on USDBRL: bearish
Several analysts note that the exchange rate movement recorded by the Central Bank began the year with high positive balances, both in the commercial and financial accounts. The accumulated trade surplus from January to February 17, 2023 (13 working days in February) is USD 4.929 billion, against USD 0.081 billion in the same period last year (using the first 13 working days of February for comparison). The financial surplus in 2023 is USD 4.604 billion, compared to a deficit of USD 0.361 billion in the same period in 2022. The high foreign appetite for Brazilian assets has contributed to containing the weakening of the real at a time of greater perception of fiscal and political risks reported by domestic investors that favor volatility in asset prices.
Access the interactive dashboard with detailed information on the exchange rate flow since 1982 at https://stonex.digital/interativos/041f5f1f-f13f-4b92-916f-11bed5761ad5
The StoneX Group Inc. group of companies provides financial services worldwide through its subsidiaries, including physical commodities, securities, exchange-traded and over-the-counter derivatives, risk management, global payments and foreign exchange products in accordance with applicable law in the jurisdictions where services are provided. References to over-the-counter (“OTC”) products or swaps are made on behalf of StoneX Markets LLC (“SXM”), a member of the National Futures Association (“NFA”) and provisionally registered with the U.S. Commodity Futures Trading Commission (“CFTC”) as a swap dealer. SXM’s products are designed only for individuals or firms who qualify under CFTC rules as an ‘Eligible Contract Participant’ (“ECP”) and who have been accepted as customers of SXM. StoneX Financial Inc. (“SFI”) is a member of FINRA/NFA/SIPC and registered with the MSRB. SFI is registered with the U.S. Securities and Exchange Commission (“SEC”) as a Broker-Dealer and with the CFTC as a Futures Commission Merchant and Commodity Trading Adviser. References to securities trading are made on behalf of the BD Division of SFI and are intended only for an audience of institutional clients as defined by FINRA Rule 4512(c). References to exchange-traded futures and options are made on behalf of the FCM Division of SFI . StoneX is a trading name of StoneX Financial Ltd (“SFL”). SFL is registered in England and Wales, Company No. 5616586. SFL is authorized and regulated by the Financial Conduct Authority [FRN 446717] to provide to professional and eligible customers including: arrangement, execution and, where required, clearing derivative transactions in exchange traded futures and options. SFL is also authorised to engage in the arrangement and execution of transactions in certain OTC products, certain securities trading, precious metals trading and payment services to eligible customers. SFL is authorised & regulated by the Financial Conduct Authority under the Payment Services Regulations 2017 for the provision of payment services. SFL is a category 1 ring-dealing member of the London Metal Exchange. In addition SFL also engages in other physically delivered commodities business and other general business activities which are unregulated and not required to be authorised by the Financial Conduct Authority. StoneX Group Inc. acts as agent for SFL in New York with respect to its payments services business. StoneX APAC Pte. Ltd. acts as agent for SFL in Singapore with respect to its payments services business. ‘StoneX’ is the trade name used by StoneX Group Inc. and all its associated entities and subsidiaries.
Trading swaps and over-the-counter derivatives, exchange-traded derivatives and options and securities involves substantial risk and is not suitable for all investors. Past performance of any futures or option is not indicative of future success. Indicators are not a trading system and are not published as a specific trade recommendation. The information herein is not a recommendation to trade nor investment research or an offer to buy or sell any derivative or security. It does not take into account your particular investment objectives, financial situation or needs and does not create a binding obligation on any of the StoneX group of companies to enter into any transaction with you. You are advised to perform an independent investigation of any transaction to determine whether any transaction is suitable for you. No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior written consent of StoneX Group Inc.
© 2026 StoneX Group Inc. All Rights Reserved.
Our subscribers have access to comprehensive market analysis from StoneX spanning commodities, equities, currencies and more.
The euro-dollar has bounced off multi-year support, but the more important shift is happening in interest rate expectations. As bets on another Federal Reserve rate hike fade, the U.S. dollar is quietly losing the tailwind that carried its recent strength.
The U.S. dollar is the single biggest swing factor for gold and silver, and its long-term trend is now being tested. A confirmed turn in the dollar could reset the outlook for precious metals, either capping them further or opening room toward new records.
Dollar to reflect Copom interest rate decision and US economic data
Our market expertise, advanced platforms, global reach, culture of full transparency and commitment to our clients’ success all set us apart in the financial marketplace.
Reach
With access to 40+ derivatives exchanges, 180+ foreign exchange markets, nearly every global securities marketplace and numerous bi-lateral liquidity venues, StoneX’s digital network and deep relationships can take clients anywhere they want to go.
Transparency
As a publicly traded company meeting the highest standards of regulatory compliance in the markets we serve; our financials and record of accomplishment are matters of public record. StoneX’s commitment to “doing the right thing over the easy thing” sets us apart in the industry and helps us build respect, client trust and new partnerships.
Expertise
From our proprietary Market Intelligence platform, to “boots on the ground” expertise from award-winning traders and professionals, we connect our clients directly to actionable insights they can use to make more informed decisions and achieve their goals in the global markets.
