BRL likely to move more or less sideways vs USD until any concrete progress on pension reform, says Commerzbank

The Brazilian real is expected to move more or less sideways against the greenback in a wait-and-see stance as long as there is no concrete progress on the country’s pension reforms, according to the latest research report from Commerzbank.

The Brazilian central bank is scheduled to hold its monetary policy meeting today at 21:00GMT for the first time under the new governor Roberto Campos Neto. The short-term monetary policy course is unlikely to change, and the key interest rate is likely to remain unchanged today, the report added.

The focus will therefore be on the accompanying statement. After the recent weak economic data, the market is looking for signals for a further easing of monetary policy, although the majority of market participants still expect key rates to be raised next year.

"Today's decision is unlikely to have any significant impact on the BRL. The main driver is and will remain the pension reform. There is currently no progress here, as politicians have announced that the government first has to make a proposal for the military," Commerzbank added in its comments.