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Dollar hits BRL 5.25 with market risk aversion ahead of interest rate decisions

O dollar rose 0.36%, quoted at R$5,258, around 9:15 am this Friday (16), favored by continued risk aversion among investors amid intensifying fears of a global recession, as countries try to fight record levels. in inflation .

Investors are now focused on the monetary policy meeting in United States next week. The meeting should give new signs about the next steps in the cycle of interest rate hikes in the country. Brazil will also define its interest rate, with a meeting of the Monetary Policy Committee (Copom ).

The main indicator released this week, the Consumer Price Index (CPI) for August in the United States slowed down in the 12-month period to 8.3% but had a positive monthly variation of 0.1%, with a rise in the core.

The data frustrated the market, which was projecting deflation of 0.1% in the monthly comparison, and now it started to expect a monetary policy from the Federal Reserve more aggressive.

A 0.75 percentage point rise in interest rates in September is still the majority opinion of the market, but the CPI has opened the door to bets on an even greater increase, of 1 pp. Furthermore, it has led to bets of a tougher cycle, with higher higher in November and December. As a result, the scenario became more positive for the US currency.

O central bank will hold an auction of up to 15 thousand traditional foreign exchange swap contracts in this trading session for the purpose of rolling over the maturity date of October 3, 2022.

On Thursday (15), the dollar advanced 1.18%, to R$ 5.239. already the Ibovespa retreated 0.54%, to 109,953.65 points.

overall feeling

Investors’ global risk aversion, 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 also monitor the state of the economy in China , which also shows 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 recently 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. This picture, however, is limited depending on the degree of risk aversion abroad.

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*With information from Reuters

Source: CNN Brasil

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