Dollar closes at R$5.074 awaiting Copom; Stock market remains stable

What happened

The focus of the week is on speeches by authorities from the Fed (Federal Reserve), the US central bank. This comes after, last week, the bank’s chair, Jerome Powell, practically ruled out the possibility of further interest rate hikes this year.

Additionally, weaker-than-expected employment data lifted global optimism. The numbers released on Friday (3) kept hopes alive that the Fed will cut its key rate once or twice in 2024.

The market expects the Fed members who will speak throughout this week to choose caution. According to Diego Costa, head of exchange for the North and Northeast at B&T Câmbio, investors are also waiting for members of the US Central Bank to ask for more evidence of a slowdown in inflation and the job market.

Brazilian market awaits Central Bank monetary policy meeting. The BC will close its two-day monetary policy meeting on Wednesday (8) in a scenario of renewed uncertainty that led BC president Roberto Campos Neto to open the door in April for the Copom to reduce the pace of cuts in the Selic, currently at 10.75%, despite its most recent future guidance indicating maintenance of the 0.50 point pace.

Economists consulted in a Reuters survey were divided on the pace of monetary easing. The majority now believes in a slowdown to 0.25 points, although a significant portion believe in maintaining the 0.50 point step. Implied probabilities in interest rate futures contracts show almost a 90% chance of the BC cutting the Selic rate by just 0.25 percentage points this week.