Short-Term Indications Of A JPY/BRL Reversal

The Brazilian real remains the top performer among Latin currencies this year, having posted gains of 26.4% against the US dollar. The currency has remained highly appealing throughout 2009, in large part due to the strong rally in global markets and the decisive return of investor risk appetite since March. A trade which has served us particularly well as a global risk barometer has been the JPY/BRL cross-rate, which has performed in the real's favour - up 26.7% on the year. Indeed, we have been bullish real against yen since April 2, targeting JPY50.50/BRL, a level which has been taken out in mid-June.

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