Dollar falls today after interest rates in the US and change from Moody’s – 05/02/2024 – Market

The dollar fell significantly this Thursday (2), on a day of adjustments after the Labor Day holiday and with a new interest rate decision by the Fed (American central bank), which decided to maintain interest rates between 5.25 % and 5.5%, the highest level in 23 years. In the domestic scenario, the market reflects Moody’s decision to improve Brazil’s outlook from “stable” to “positive”.

In its statement after the decision, the United States central bank signaled that interest rates are likely to remain higher for longer as the country deals with persistent inflation.

The monetary authority stated that it will postpone cuts until at least the second half of this year. The Fomc (US monetary policy committee) said after Wednesday’s meeting (1st) that there had been a “lack of additional progress” in recent months to reach the 2% inflation target.

The president of the institution, Jerome Powell, once again said that the authorities still need time to gain confidence in the disinflation process, but stated that he considers a new interest rate increase this year unlikely — something that had already been considered by the market.

“The decision to keep rates unchanged was already expected and everyone was paying attention to possible signs indicating the Fomc’s propensity to postpone the start of the cutting cycle. The big change in the statement was recognizing the resistance of inflation in recent months, which will be interpreted by the market as confirmation that interest rates are not likely to start falling anytime soon”, says Danilo Igliori, chief economist at Nomad.

Higher interest rates in the USA tend to benefit the dollar, and the American currency has seen a jump in recent weeks precisely due to the prospect that American interest rates are likely to remain at a high level.

The real, however, is being strengthened by Moody’s change of outlook for Brazil, in its first rating change for the country since 2018, when it raised the country’s outlook from “negative” to “stable”.

At 9:15 am, the dollar fell 0.93%, quoted at R$5.143. The DXY index, which measures the dollar’s performance against other strong currencies, remained stable, indicating the strengthening of the real against the American currency.