O dollar rises this Friday (4), with the market reacting to new developments in the war between Ukraine and Russia and reflecting increased tension in relation to the conflict. One of the focus of investors on the day is the Payroll report, which should influence the bets on interest rate hikes in the United States already scheduled for the Federal Reserve meeting in March.
At around 9:26 am, the US currency advanced 0.26%, quoted at R$5.041.
In Brazil, investors digest the Gross Domestic Product (GDP) of 2021, which came above market expectations and ended the year with growth of 4.6%.
On Thursday (3), the dollar fell 1.62%, quoted at R$ 5.026. already the Ibovespa closed stable, with a slight drop of 0.01%, at 115,165.55 points.
War in Ukraine
Investors’ focus remains on the war in Ukraine and its aftermath. From an economic point of view, the main event involving the conflict is the series of sanctions announced by the United States and its Western allies.
Among them are the expulsion of Russian banks from Swifta global payments system, and the freezing of reserves by the central bank of Russia. Countries that support Ukraine have already said they must implement new sanctions against Russia, which has seen its currency, the ruble, plummet and reach a historic low.
At the same time, the invasion by Russia continues, with new attacks on Kharkiv, Ukraine’s second largest city, and Kiev, the country’s capital, which is surrounded by Russian troops. The two nations held a new round of talks on Thursday, but with little progress. Rising tensions, Russian forces took control Zaporizhzhia nuclear power plantthe largest in Europe. Follow CNN’s live coverage.
The war, and the chances of further escalations in the geopolitical scenario, increase risk aversion of investors and the search for the dollar. The DXY index, which compares the currency against others, rises this Friday.
The VIX, called the “fear index” for trying to measure the degree of market volatility, advances and is around 34 points, after reaching the highest level since September 2020.
Another consequence of the invasion is the rise in commodity prices, especially those linked to Russia and Ukraine, case of corn, wheat and oil. The Brent type, Petrobras’ reference for pricing policy, continues to rise and is already around US$ 115.
commodities
The situation in Ukraine reduces the benefits to the real of a cycle of investment migration to markets linked to commodities and seen as cheap, with Brazil also benefiting from high interest rates, which limits the effects of bets on an aggressive interest rate policy for the Federal Reserve.
The cycle was linked, in part, to expectations of more pro-growth measures in China that are raising hopes of a recovery in demand for metals, which has led to higher prices, reinforced by the crisis in Ukraine.
In the case of oil, analysts already projected that it would exceed US$ 100 throughout the year, which happened with the crisis in Ukraine. The U.S. commodity jumped as much as 5.4% to $116.57 a barrel on Thursday — the biggest trade since September 22, 2008.
The main factor for the increase is the mismatch between supply and demand for the commodity, with the main producers, gathered in OPEC, still not resuming pre-pandemic production levels, and the situation was intensified with the tensions in europe.
Another factor that weighed on this movement is the expectation of interest rate hikes in U.S in March, of 0.25 or 0.5 percentage point, reinforced by inflation data slightly higher than expected.
As a result, foreign investors have withdrawn from the US stock market. Federal Reserve Chairman Jerome Powell said Wednesday that the the already announced high interest rate cycle is maintained even with the war, signaling a 0.25 percentage point rise in March.
*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.
