Dollar closes at R$5.07 and reaches its highest level in six months, after poor inflation data in the USA; Ibovespa falls

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The North American currency rose 1.41%, quoted at R$5.0774, renewing its highest level since October last year. The main stock index on the Brazilian stock exchange is falling in the last minutes of the trading session. Roberto Campos Neto, on inflation: “We had good news locally, and bad news in the external scenario” The dollar closed sharply higher this Wednesday (10), following data from the United States consumer price index (CPI, in acronym in English) were worse than expected and ruled out the possibility of a cut in American interest rates by the Federal Reserve (Fed, the US central bank). Ibovespa, the main stock index on the Brazilian stock exchange, B3, is falling in the last minutes of trading, following the negative scenario abroad. See below for a summary of the markets. Dollar At the end of the session, the dollar advanced 1.41%, quoted at R$5.0774. At its maximum, it was R$5.0854. See more quotes. With the result, it accumulates increases of: 0.25% in the week; 1.24% in the month; and 4.63% in the year. On Tuesday, the dollar fell 0.47%, quoted at R$5.0070. Ibovespa Ibovespa was falling in the last minutes of the trading session. On Tuesday, the index closed up 0.80%, at 129,980 points. With the result, it accumulates: increase of 2.44% in the week; increase of 1.39% in the month; and a decline of 3.20% in the year. Understand what makes the dollar rise or fall CASH OR CARD? What is the best way to take dollars when traveling? DOLLAR: When is the best time to buy the currency? What’s moving the markets? On the agenda, the main highlight this week was the release of the consumer price index (CPI) for the United States this Wednesday. Consumer inflation accelerated and reached 3.5% in March, against 3.2% recorded in February and above market expectations. Monthly inflation was 0.4%, the same margin as in February and also above expectations. Economists consulted by Reuters predicted that the index would rise 0.3% in the month and 3.4% on an annual basis. The US central bank has an inflation target of 2%. Following stronger-than-expected job growth in March, as well as the unemployment rate falling from 3.9% in February to 3.8%, some economists have pushed back interest rate cut expectations to July. After the indicators, financial markets saw a roughly 84.8% probability of the Fed maintaining interest rates at its June 11-12 policy meeting, according to CME’s FedWatch tool. In the minutes of the last meeting of the Federal Reserve (Fed, the North American central bank), also released on Wednesday (10), Federal Reserve authorities expressed concern about the possibility that the progress of inflation had stagnated and could be A longer period of restrictive monetary policy is necessary to control the pace of price increases. “In general, participants highlighted their uncertainty about the persistence of high inflation and expressed the view that recent data had not increased their confidence that inflation is moving sustainably towards 2%,” the minutes said. Fed officials are debating whether the bigger risk is that monetary policy remains too tight for too long or that the Fed cuts rates too soon and fails to get inflation back to its 2% target. Last week, the payroll, the main North American employment report, once again indicated a strong job market in the country. According to the US Department of Labor, the country opened 303,000 jobs outside the agricultural sector last month, above market projections of 200,000 new jobs. Still abroad, markets also followed the variation in international iron ore prices, which rose at the beginning of the week amid expectations of improved demand from China, the largest global consumer of the commodity. In Brazil, the main highlight of the week is the Broad National Consumer Price Index (IPCA). The country’s official inflation shows that prices rose 0.16% in March, below financial market expectations. The biggest impact of the month came again from the Food and beverages group, with an increase of 0.53% and a weight of 0.11 percentage points (pp) in the general index. But it is a smaller monthly variation than in February, when the group’s prices had risen 0.93%. For the financial market, inflation came in well below projections, but it still does not eliminate concerns about inflation in services. Underlying services, a core focused on services and excluding more volatile items, rose slightly stronger than the previous month, from 0.44% to 0.45%. “The point of concern continues to be the underlying services, which, while remaining practically stable, remain at a level incompatible with inflation targets – and should continue to justify the Central Bank’s caution”, says Helena Veronese, chief economist at B Side. On the corporate agenda, the focus throughout the week was on the news involving Petrobras. Last week, rumors resurfaced in the market that the president of the state-owned company, Jean Paul Prates, could be fired from the company and replaced by the current president of BNDES, Aloizio Mercadante. The news that the government also decided to pay part of Petrobras’ dividends, an issue that was the subject of a crisis with Prates, also continued to be in the spotlight. According to Julia Duailibi’s blog, half of the dividends will be paid, a value of around R$20 billion.

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