Follow the exchange rate of the dollar and the stock market this Monday (4) – 12/04/2023 – Market

The financial market started the week in risk aversion. This Monday (4), investors echo the estimate of higher inflation in 2023 and 2024, according to the Focus bulletin.

Economists interviewed by the BC (Central Bank) now expect this year’s IPCA (Broad National Consumer Price Index) to be 0.01 percentage points higher compared to the previous week, at 4.54%. For 2024, the estimate also increased by 0.01 percentage point, to 3.92%. For 2025 and 2026, inflation remained at 3.5%.

At 12:02 pm, the Ibovespa fell 0.59%, to 127,419 points. The dollar rose 0.63%, to R$4.91.

On Wall Street, the main stock indices are also falling. The S&P 500 falls 0.70% and Dow Jones, 0.35%. The Nasdaq drops 0.94%.

The negative bias in the global equity market reflects the rise in Treasury yields (American Treasury bonds), while investors awaited economic data from Brazil and the United States scheduled for the next few days.

This morning, the yield on the ten-year US government bond rose to 4.2529%, compared to 4.224% in the previous session.

Last week, the dollar had its third consecutive week of decline, in line with the decline in American interest rates, as bets have been growing that the Fed (US Central Bank) would have ended its monetary tightening cycle, and could start cutting interest rates in the first half of next year.

Seeking to support these expectations, investors will turn their attention to an important American employment report scheduled for this Friday (8). Weak data tends to reinforce bets on a dovish Fed, but upward surprises would likely reverse the global market’s recent optimism, potentially increasing demand for the safety of the dollar.

“The question now is whether the decline in rates and the dollar was excessive. Crucial information about the US labor market this week should help both the markets and the Federal Reserve answer that question,” said Eduardo Moutinho, an analyst at Ebury market.

The fall in the prices of important commodities, such as oil and iron ore, contributed to the rise of the US currency against the real in this session.

Meanwhile, in Brazil, investors await data on the Gross Domestic Product (GDP) for the third quarter, which will be published on Tuesday (5).

The spot dollar closed the last session, on Friday (1st), quoted at R$ 4.88 on sale, down 0.69%.

With Reuters