O dollar in cash rose strongly in the session this Tuesday, 30th, and approached the level of R$ 5.20 again. Higher-than-expected data on employment costs in the United States, on the eve of the Federal Reserve’s (Fed, the North American central bank’s) monetary policy decision, led to a global strengthening of the American currency and a firm rise in Treasury rates.
The real had the third worst performance among emerging currencies and the most relevant commodity exporters. Operators claim that the search for dollars was boosted by the fact that the local market is closed tomorrow, due to the Labor Day holiday. Any signals from the Fed about the direction of American interest rates will only be absorbed by domestic assets on Thursday, the 2nd.
With a maximum of R$ 5.1938 in the afternoon, in line with the exterior, the dollar in cash ended the session up 1.51%, quoted at R$5.1923 – the highest closing level in ten days. The currency ends April with gains of 3.53%, the highest monthly appreciation since August last year (4.69%). As a result, the currency has already advanced 6.98% this year. In the morning and early afternoon, there was also pressure due to technical issues, with the rollover of positions in the futures segment at the turn of the month and the dispute over the formation of the last ptax rate for April.
Thermometer dollar behavior in relation to a basket of six strong currencies, in particular the euro and the yen, the DXY index it once again surpassed 106,000 points, with a maximum of 106,229 points. The 2-year T-note rate, more linked to expectations for the direction of interest rates this year, surpassed the 5% barrier and reached the highest level in five months.
Dollar: tense climate ahead of Fed decision
According to the head of Treasury at Travelex Bank, Marcos Weigt, the tense climate on the eve of the Fed’s monetary policy meeting was exacerbated after the release of data showing an increase in labor costs in the US, which suggests inflationary pressures ahead . “Treasury rates rose with the market pricing in just a 25-point cut by December,” says Weigt.
The treasurer notes that the real had been appreciating in recent days in relation to the Mexican peso, with the prospect of fewer cuts in the Selic rate following tougher statements by the president of the Central Bank, Roberto Campos Neto, throughout April. “But the behavior of real It is now closely linked to the movement of Treasuries. Let’s see what the Fed’s tone will be tomorrow,” says Weigt.
It is taken for granted that the American Central Bank will announce the maintenance of the base rate in the range between 5.25% and 5.50%. Attention turns to the announcement of the decision and, above all, to the press conference by Fed President Jerome Powell. There will be no review of the American Central Bank directors’ projections for the interest rate. In March, the majority projected three reductions of 25 basis points in 2024.
Monitoring by the CME Group showed that the chances of an interest rate cut in September fell below 50% this Tuesday. The most likely scenario is just a reduction of 25 basis points this year, but the possibility of maintaining the base rate in 2024 has risen to 25%.
In the morning, the US Department of Labor reported that the US employment cost index rose 1.2% in the first quarter of 2024 compared to the fourth quarter of 2023, above forecasts (0.9%). The fear of increasing inflationary pressures made investors put aside the drop in American consumer confidence in April and lower-than-expected data from the United States Purchasing Managers’ Index (PMI), measured by the Institute for Management. Offer (ISM) from Chicago.
“This data on the cost of employment is a shower of cold water on the expectation of a slowdown in inflation this year and made the dollar gain strength around the world”, says the head of variable income at Criteria, Thiago Pedroso, highlighting that the indicators suggesting a loss of strength in activity in the USA ended up having no weight in price formation.
With Estadão Content
