Dollar drops on low liquidity day with US and European holidays on the radar

O dollar fell 0.24%, quoted at R$ 5.171, around 9:20 am this Monday (5), reflecting a day with low liquidity due to the holiday in United States with Brazil still benefiting from an inflow of capital.

The biggest concern of investors is the supply of natural gas from Russia to Europe . THE European Union accuses the Russian government of intentionally blocking the shipment of the product, which could generate a strong economic crisis in the region, with the risk of recession.

In addition, the successor to Boris Johnson as Prime Minister of UK . The favorite is the current Minister of Foreign Affairs Liz Truss .

In this trading session, the Central Bank will auction up to 15 thousand traditional foreign exchange swap contracts for the purpose of rolling over the maturity date of October 3, 2022.

On Friday (2), the dollar had a fall of 0.99%, quoted at R$ 5.186, in the week, the currency accumulated appreciation of 2.11%. already the Ibovespa registered 0.26%, to 110,694.15 points, with a decrease of 1.28%.

overall feeling

The global risk aversion of investors, triggered by fears about a possible generalized economic slowdown due to a series of interest rate hikes around the world to contain record levels of inflation, has varied in intensity depending on expectations about the interest rate hike cycle in the United States. United.

The process of raising the US rate continued in July with a new increase of 0.75 percentage point. However, the Federal Reserve has signaled that it could make smaller hikes as the country’s economy already shows signs of slowing, seeking to avoid a recession.

Higher interest rates in the United States attract investments for the country’s fixed income due to its high security and favor the dollar, but harm markets and stock exchanges around the world, including the North American ones.

Investors are also monitoring the situation of China’s economy, which is also showing signs of a slowdown linked to a series of lockdowns in relevant cities. The expectation is that the Chinese government will intensify an effort to stimulate the economy, while facing difficulties to reverse a situation of low consumption by the population, which impacts the country’s demand for commodities.

Even so, the Ibovespa and the real found room for recovery with an improvement in the mood of the market, supported by the positive outlook for commodities, a stronger domestic economic scenario and a reduction in the perception of risks in relation to the elections. The scenario, however, may change depending on the degree of risk aversion abroad.

*With information from Reuters