O dollar changed this Friday, the 3rd, the second consecutive session of a strong fall in the domestic exchange market, in line with the behavior of the currency abroad, and closed at the lowest level in more than 20 days. Below-expected data from the North American employment (payroll) report in April led to increased bets on interest rate cuts by the Federal Reserve (Fed, the central bank of the United States) this year, opening space for the appreciation of risk assets .
As on Thursday, the real showed the biggest gains among emerging currencies and the most relevant commodity exporting countries, in a technical movement of recovery after recent losses. Operators report the dismantling of defensive exchange positions in the futures segment and the possible entry of foreign investors into the Brazilian stock exchange.
Apart from a specific and very limited increase in the first trades, when it reached a maximum of R$ 5.1174, the currency continued to fall throughout the remainder of the session. In line with the behavior of Treasuries, it reached a low of R$5.0454, still in the morning. At the end of the day, the dollar in cash fell 0.84%, quoted at R$5.0698 – lowest closing value since April 9th.
A dollar exchange rate accumulated a drop of 2.36% in the first two trading sessions of May, after rising 3.53% in April.
Economist André Galhardo, economic consultant at Remessa Online, states that the lower-than-expected payroll reading is largely responsible for the new round of decline in the american currency. He highlights that the Dolar today This Friday it even reached the lower limit of the fluctuation range it estimates for the exchange rate, between R$5.05 and R$5.15.
“Depending on the results of the indicators that will be released next week, such as the interest rate in Brazil and inflation in Brazil and the United States, there may be a reduction in the intensity of fluctuations in the American currency”, says Galhardo.
There is a possibility that the Central Bank will announce, next Wednesday, the 8th, a reduction in the pace of cuts in the Selic rate, to 0.25 percentage points – which could, in theory, favor the real, by suggesting maintenance of the differential between interest internal and external still attractive to investors.
Dollar and payroll
In the morning, the US Department of Labor reported that the American economy created 175 thousand jobs in April, below the Broadcast Projections median (225 thousand). There was also an increase in the unemployment rate, from 3.8% to 3.9%, while maintenance was expected. Wage gains were also lower than expectations.
The chief economist at Azimut Brasil Wealth Management, Gino Olivares, states that the numbers released this Friday “basically serve to reassure the markets”, by showing that a “slowdown in the American labor market” is underway. He points out that the decrease in the pace of job creation in the services sector also suggests lower inflationary pressures ahead.
“However, caution needs to be maintained, as it was just the first job creation data that fell short of expectations in several months and, fundamentally, because it is necessary for these signs of slowdown to be transformed into a decrease in consumer inflation rates” , says Olivares.
On Wednesday, the 1st, the president of the Fed, Jerome Powell, ruled out the possibility of raising interest rates, a thesis that was beginning to be aired by a minority wing of the market, and said that a drop in the basic rate was “probable” in 2024. Monitoring by the CME Group showed that the chances of the Federal Reserve cutting interest rates in September rose from just over 50% on Thursday to over 70% this Friday, which will certainly affect the dollar’s performance.
With Estadão Content
Tags: Dollar falls sharply employment data
--
