Dollar rises and approaches R$5.20 with expectations about the Fed before the holiday

The spot dollar closed Tuesday on a strong rise in Brazil and once again approached 5.20 reais, in line with the firm advance of the currency abroad following positive economic data in the USA and before the Federal Reserve’s interest rate decision in Wednesday, when it will be a public holiday in Brazil.

The dollar in cash closed the day at 5.1927 reais on sale, up 1.52%. This is the highest closing price since April 19 of this year, when it closed at 5.1989 reais. In April, the US currency accumulated an increase of 3.53%.

At 5:07 pm, on B3, the first maturity dollar futures contract rose 1.00%, to 5.1715 reais on sale.

In the morning, the US currency was influenced, among other factors, by the dispute surrounding the formation of the end-of-month Ptax — exchange rate calculated by the Central Bank based on spot market quotations and which serves as a reference for the settlement of futures contracts.

At the end of each month, financial agents usually try to direct it to levels that are more convenient for their positions, whether long (in the direction of rising prices) or sold in dollars (in the downward direction).

Abroad, the dollar rose in the morning against most other currencies, amid the new rise in Treasury yields, which justified the advance of the US currency in Brazil.

“The dollar is gaining well abroad, with investors apprehensive ahead of the Fed’s monetary policy decision tomorrow (Wednesday). Everyone wants to hear what (Fed Chair Jerome) Powell will say, whether he will be more or less aggressive about inflation”, commented Jefferson Rugik, director of Correparti Corretora, during the afternoon.

“The dollar rose here and abroad, but here there is more of a defensive position due to the holidays,” he added.

In practice, as markets will remain closed in Brazil on Wednesday due to Labor Day, many investors preferred to wait for the Fed’s decision by buying in dollars.

After registering a minimum price of 5.1159 reais (+0.01%) at 9 am, at the opening of the session, the spot dollar reached a maximum of 5.1940 reais (+1.54%) at 2:17 pm.

On Wednesday, more than the Fed’s decision itself, which should keep the reference rate in the range of 5.25% to 5.50%, investors around the world will be paying attention to Powell’s speech, looking for of clues about when the US interest rate cut will begin.

In this scenario, the dollar remained steadily rising against most other currencies abroad, including the Chilean peso and the Mexican peso.

At 5:18 pm, the dollar index — which measures the performance of the US currency against a basket of six currencies — rose 0.57%, to 106.290.