Dollar operates higher with a resumption of risk aversion and pessimism in the market

O dollar rose 0.13%, quoted at R$5,174, around 9:15 am this Monday (22), benefiting from an intensification of risk aversion among investors as the market returns to bet on a more aggressive interest rate cycle in United States worsening perceptions about the global economy.

In the previous week, data on the North American labor market and statements by Federal Reserve gave impetus to bets on a third hike followed by 0.75 percentage point in interest rates. The move makes the dollar more attractive to investors, but reinforces fears of a recession in the country, with potential for global contamination. The focus now is on the inflation data that will be released this week.

The bad mood in the market also reflects concerns about the crisis in the supply of natural gas to Europe, impacted by the war in ukraine . Russia has signaled that the export price more than double this year and made supply cuts.

The situation of the China . The world’s second largest economy has already shown signs of slowing down, despite government efforts to encourage activity . A lower-than-expected growth in the country also has global repercussions, mainly harming large commodity exporters, such as Brazil.

On Friday, the dollar fell 0.06%, to R$5.168, accumulating a high of 1.86% in the week. already the Ibovespa devalued 2.04%, to 111,496.21 points, with a weekly loss of 0.7%.

overall feeling

Strong global risk aversion by investors, triggered by fears about a possible widespread economic slowdown due to a series of interest rate hikes around the world to contain record levels of inflation, has eased in recent days, reflecting expectations of a cycle of interest rate hikes. less aggressive in the United States.

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 may 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, but with difficulties to reverse a situation of low consumption by the population, which impacts the country’s demand for commodities.

In the domestic scenario, the Benefits PEC which creates or expands social benefits with an estimated cost of R$ 41 billion, was poorly received by the market, as it reinforces the fiscal risk by bringing new spending above the ceiling.

The Ibovespa and the real were harmed by the scenario, but an apparent greater optimism in the market has allowed a recovery.

*With information from Reuters