Dollar rises slightly after Copom and IPCA-15 minutes amid expectations for US data

The dollar rose slightly against the real this Tuesday, even after the harsh minutes of the Central Bank’s last monetary policy meeting and the higher-than-expected IPCA-15 data, with investors awaiting numbers of North American inflation at the end of the week.

At 9:42 am (Brasília time), the dollar in cash rose 0.14%, to 4.9813 reais on sale. On B3, the first-month dollar futures contract fell 0.02%, to 4.973 reais on sale.

In the US, the PCE price index, the Federal Reserve’s favorite indicator of inflation, will be published on Friday, when markets in Brazil and several developed countries will be closed for Good Friday. Therefore, investors should avoid big bets in this holiday-shortened week, some market participants said.

According to Márcio Riauba, manager of StoneX’s trading desk, the PCE “may confirm the narrative of loosening monetary policy in the United States”, with most of the market currently predicting a first interest rate cut in June.

In Brazil, the minutes of the last meeting of the Monetary Policy Committee (Copom) showed this Tuesday that some members of the collegiate consider that a reduction in the pace of interest rate cuts may be necessary if uncertainties remain high ahead.

“Reading the document leaves a ‘hawk’ bias… It seems to us that the base scenario for the meeting following the next one — that is, in June — is not closed for the Copom, but the chance of a 25-point cut- base, today, is bigger”, said Marco Caruso, chief economist at PicPay.

A slowdown in the rate of easing by the BC is seen as a possible boost for the real, as this would reduce the speed of closing the interest rate differential between Brazil and the United States.

The greater the interest rate differential between the two countries, the more interesting the real becomes for use in “carry trade” strategies. These consist of taking out loans in a country with low interest rates and investing that money in more profitable markets, so that you profit from the difference in rates.

Earlier, the IBGE reported that the IPCA-15 slowed down again in March with the loss of strength from the seasonal impact of education, but was still above expected under the weight of food and beverage prices.

The IPCA-15 rose 0.36% in March, from a rise of 0.78% in February, in a result that was slightly above the Reuters poll’s expectation of an increase of 0.32%.

The day before, the dollar in cash closed the day at 4.9741 reais on sale, down 0.49%.