Exchange rate: Dollar closes higher impacted by GDP and PCE preview

The commercial dollar closed up 0.28%, quoted at R$5.16, rising for the second day in a row. In this Thursday’s trading session, the foreign currency was impacted by the first reading of the American Gross Domestic Product (GDP) for the first quarter of 2024.

The preview of PCE inflation was strong and investors remained cautious on the eve of the release of official PCE inflation for March tomorrow (25). This led to a significant increase in Treasury rates (American government bonds), triggering a new round of devaluation of Latin American currencies, such as the real, the Mexican peso and the Colombian peso.

US economic indicators

The release of the US Gross Domestic Product (GDP) for the first quarter was a negative surprise, with growth of 1.6%, below market expectations. Furthermore, the consumer spending price index (PCE) accelerated, reaching 3.4% in the first months of 2024 in annualized terms, signaling persistent inflationary pressures.

Felipe Garcia, head of the operations desk at C6 Bank, highlighted that this data reinforces the expectation of a more aggressive stance by the Federal Reserve (Fed) in the face of inflation, with a potential impact on interest rates and the value of the dollar.

Dollar behavior

During the trading session, the dollar registered a drop, reaching R$ 5.1119 in the first moments, but reversed the trend after the release of American indicators. The day’s high was R$5.1930, in line with the peaks in Treasury rates.

At the end of the session, the American currency closed at R$5.1635, an increase of 0.30%. Despite the recent highs, the dollar still accumulates a drop of 0.69% in the week.

Currency flow and news from Brasilia

The Central Bank (BC) reported a negative exchange rate flow last week, with outflows exceeding inflows, which contributes to upward pressure on the dollar. However, news coming from Brasília about Petrobras’ dividend distribution may help reduce risk aversion and short-term pressure on the real.

Bruno Komura, an analyst at Potenza Capital, said that the fact that Petrobras’ board of directors approved the distribution of 50% of extraordinary dividends should have affected the dollar “because it hits interest rates here”.

Komura added that this rise in the dollar still reflects “the pessimistic feeling regarding GDP that came out today. If it weren’t for this news, the scenario would be more positive, the dollar could fall.”

*With information from the CMA Agency