The Central Bank announced, after the market closed on Monday, that it will carry out its first intervention in the foreign exchange market today since the end of 2022. It turns out that yesterday the dollar jumped to the range of 5.05 reais – the highest level since October . If the reasons for the rise so far were external, now internal factors can influence the rise.
The BC’s offer will be 1 billion dollars in swap contracts. According to the BC itself, there is a reason for the action. On April 15th, a batch of public bonds in American currency will expire, and the settlement of the transaction means that there could be an increase in demand for dollars. Under normal conditions of temperature and pressure, the financial market would absorb this fluctuation.
It turns out that the market is not in the CNTP. Yesterday, data on American industrial activity showed expansion in March, at a level above what analysts expected. Robust data scares investors who fear, once again, the postponement of the interest rate cut cycle in the USA.
For now, forecasts measured by CME Watch still indicate that 53% of investors believe in a first cut in June. A week ago, the figure was 63%. Furthermore, the percentage that bets on maintaining the rate rose from 29.8% to 41%. For the end of the year, the game is shuffled. The “dominant” bet indicates that American interest rates would end 2024 at 4.75%, which gives a cut of 0.75 pp, or three reductions of 0.25 pp. The second bet is a 0.50 pp cut this year.
This change in expectations attracts the dollar to the United States and weighs on global currencies. That’s what happened yesterday with the real as well.
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As if the exchange rate wasn’t enough, there’s also oil. Brent-type barrels jumped and are trading at their highest level since October, close to 90 dollars. Good for Petrobras, which is advancing more than 1% in the pre-market and makes the EWZ go against New York, whose futures are falling.
On Wall Street, the main indicator of the day is the release of open positions, which helps to predict what the job market is like in general. It will be a long week for investors. Good Business.
Agenda of the day
8:30 am: BC publishes credit statistics for February
9am: Germany announces March inflation
11am: US releases Jolts report on job openings in February
11am: USA publishes orders for industry in February
12:30 pm: BC holds additional swap auction of up to US$1 billion
5pm: Haddad participates in Bradesco BBI event
Tags: dollar intervention Lula government
