Speculation that Rousseff, who has overseen the slowest growth of any Brazilian president in two decades, is declining in popularity has helped push the real up 6.7 percent this year, the most among 24 emerging-market currencies. Brazil’s 7-1 defeat to Germany in a World Cup semifinal last week may hurt Rousseff’s standing in voter polls, according to Joao Paulo de Gracia Correa, a foreign-exchange trader at Correparti Corretora de Cambio in Curitiba, Brazil.

“Elections are going to be the main focus for investors now, and the real usually advances when Rousseff declines in polls,” de Gracia Correa said in a telephone interview.

A Datafolha poll conducted July 1-2 before Brazil’s World Cup loss to Germany indicated that Rousseff’s support jumped four percentage points to 38 percent following three straight drops this year. The poll of 2,857 people had a margin of error of 2 percentage points.

 

Eoin Treacy's view

Speculation about the ramifications of Brazil’s failure to win the World Cup on home turf is unsurprisingly dominating headlines. By the time the presidential election’s first round, scheduled for October 5th, comes around, the World Cup is likely to be a distant memory. Dilma Rousseff’s failure to deliver on growth potentially opens up the potential for Aécio Neves, who has a successful record of infrastructure development, to pose a potent threat.  

Speculation about the ramifications of Brazil’s failure to win the World Cup on home turf is unsurprisingly dominating headlines. By the time the presidential election’s first round, scheduled for October 5th, comes around, the World Cup is likely to be a distant memory. Dilma Rousseff’s failure to deliver on growth potentially opens up the potential for Aécio Neves, who has a successful record of infrastructure development, to pose a potent threat.  

The Real is benefitting from the Bank of Brazil’s commitment to defend the BRL2.4 area and a sustained move below above that level would be required to reaffirm Dollar dominance.

The Bovespa Index continues to firm and is now testing the region of the three-year progression of lower rally highs. A sustained move below 52,000 would be required to question medium-term scope for additional upside. 

Considering the commonality between the industrial metals, an increasing number of miners and the Brazilian market, we might conclude that the anticipated late in the cycle run in basic resources sectors is underway.