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Dollar operates in fall with favorable flow of investments and US interest on the radar

O dollar fell 0.28%, quoted at R$ 5.143, around 9:30 am this Friday (12), in a week marked by market volatility in relation to bets on the next steps of the cycle of high interest rates in United States .

At the beginning of the week, the Brazilian market had a strong appreciation after the Consumer Price Index (CPI) in the United States of July have no change from the previous month with the 12-month accumulated decrease from 9.1% to 8.5%, below the 8.7% expected by the market.

Despite not being the reference Federal Reserve to measure the inflation , the indicator reflects the inflationary scenario in the country. The result reinforced bets that the municipality could be less aggressive in the cycle of high interest rates.

Days later, however, speeches by local government officials reinforced the need to aggressively fight inflation, reversing part of the bets. Subsequently, another leader had a softer speech, increasing optimism among investors.

The market has been changing its position on the degree of aggressiveness of the Fed depending on the economic data and speeches that are released. Bets on a more aggressive cycle tend to favor the dollar as it makes the US market more attractive.

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 September 1, 2022.

On Thursday (11), the dollar rose 1.46%, to R$ 5.159. already the Ibovespa fell by 0.47% to 109,717.94 points.

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 also monitor the state of the economy of China , which also shows signs of a slowdown linked to a series of lockdowns in relevant cities. The Chinese government is expected to intensify an effort to stimulate the economy, which should help maintain high 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.

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*With information from Reuters

Source: CNN Brasil

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