Dollar falls to R$5.10 after Fed and improvement in Brazil’s outlook by Moody’s

The dollar operates lower this Thursday morning, 2nd, echoing the retreat of the American currency and Treasury yields, after interest rates in the USA were maintained and signals from the Federal Reserve that it should not raise rates, despite inflation and the market resilient workforce in the country.

At around 12pm, the spot dollar fell 1.71%%, to R$5.107. See quotes.

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Local investors also make profits, after the dollar rose 3.53% in April, following the improvement in the outlook for Brazil’s Ba2 rating, from “stable” to “positive”, by the Moody’s agency during the local holiday. The Minister of Finance, Fernando Haddad, said that the decision reflects joint work by the Three Powers, which place the country’s interests above divergences.

The rise in oil prices also contributes to the relief in the dollar and the interest curve. Iron ore fell 0.06% in Dalian, China.

On Wednesday, the Fed also indicated that it may take longer to decide to cut, and changed the pace of reducing its balance sheet from June onwards, given the still high inflation in the country. Thus, the market once again prices September as the first month with a majority chance of cuts starting, according to the CME Group monitoring tool.

On the day’s agenda, the result of current transactions was negative at US$4.579 billion in March, the Central Bank reported earlier. This is the worst performance for the month since 2021, when the balance was negative at US$8.555 billion. In February, the result was a deficit of US$4.373 billion. The deficit in March was greater than the median of the Projeções Broadcast survey, with a negative balance of US$3.10 billion. The number was within the range (-US$5.974 billion to +US$300 million). In the year up to March, the current account had a deficit of US$14.398 billion. In 12 months, the current account balance is negative at US$32.606 billion, which represents 1.46% of the Gross Domestic Product (GDP).

The Weekly Consumer Price Index (IPC-S) accelerated to 0.42% at the end of April, after closing March with a variation of 0.10%. As a result, the index accumulates an increase of 2.84% in 12 months.

In the US, data on weekly unemployment benefits, the trade balance in March and the quarterly unit labor cost are expected, all at 9:30 am; in addition to data on industrial orders, at 11 am; and the global industrial PMI for April, at 12 noon.