THE dollar rose 1.11%, quoted at R$5,132, around 9:25 am this Monday (9), reflecting a spread of pessimism among investors regarding the global economy and an aversion to risks.
Signals of interest rate hikes by the Federal Reserve down 0.5 pp in the last week and weak export data from China raised fears of an economic slowdown.
The market’s focus this week is on the release of the Consumer Price Index (CPI) of U.S referring to April, an indicator of inflation that should give more clues about the next steps in the cycle of interest rate hikes in the country.
In Brazil, the most important event will be the disclosure of the Broad Consumer Price Index (IPCA ) of April, the official measure of inflation for the central bank . With the data, the market expects to have more clarity about the next interest rate hike already signaled by the autarchy, and if it will really end the cycle started in 2021.
In terms of both Brazilian and North American data, the market will look for signs of a possible inflation peak, which would facilitate, in the Brazilian case, the end of the cycle of high interest rates, with a smaller increase in June and, in the case of the States, lower increases in the next meetings, impacting less on economic activity.
The Central Bank will auction up to 15,000 traditional foreign exchange swap contracts in this trading session for the purpose of rolling over the maturity date of July 1, 2022.
In the previous week, the dollar advanced 2.63%, closing on Friday (6) at R$ 5.073. already the Ibovespa had a weekly drop of 2.54%, reaching 105,134 points.
global pessimism
The most recent instigator of global risk aversion was the interest rate hike in the US , announced by the Federal Reserve on Wednesday (4). Despite discarding hikes of 0.75 pp or a risk of recession, the municipality signaled at least two more hikes of 0.5 pp
Higher interest rates in the United States attract investments for the fixed income of the country due to its high security, but it harms the exchanges around the world, including the North American ones.
Along with a series of interest rate hikes around the world, lockdowns in china to try to contain Covid-19, projections of a strong economic slowdown are increasing, hurting markets.
THE war in ukraine and its inflationary effects with disruption of chains and sanctions, especially in commodities such as oil, also worsen the situation. After the European Union announced a plan to ban Russian oil imports oil once again surpassed US$ 110 a barrel.
effects in the real
Returning to R$5, the dollar reversed part of the gains that the real obtained in the first months of the year due to a combination of factors that influence the flow of purchase and sale of the dollar.
To the CNN Brasil Business experts associated this recent appreciation to two main factors: the prospect of higher interest rate hikes in the United States and fears regarding the lockdowns established in a number of economically relevant cities in China .
Higher US interest rates tend to attract investments to the country’s Treasury bond market, drawing capital from markets considered riskier than U.S the case of Brazil.
The measures to control the spread of the Covid-19 in China, which affect cities like Shanghai and Beijing, tend to reduce the world’s second-largest economy’s demand for commodities harming its main suppliers, including Brazil, and negatively influencing the prices of these products.
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*With information from Reuters
Source: CNN Brasil
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
