Dollar enters the 3rd low day this Thursday; see quotation – 04/13/2023 – Market

The dollar opened in decline this Thursday (13), extending a sequence of losses that took it to the lowest closing level in ten months on the eve. Investors are paying attention to US indicators of inflation and the job market. This attention should increase after the minutes of the last meeting on interest rates of the Fed (Federal Reserve, the US central bank), released this Wednesday (12).

This Thursday will be released the IPP (Producer Price Index), the industrial inflation of the United States. Another piece of data that will be closely monitored is the number of unemployment insurance claims in the country.

At 10:00 am (Brasília time), the spot dollar retreated 0.26%, to R$ 4.9281 in the sale.

On B3, the first-maturity dollar futures contract rose 0.13% to R$4.9400.

After surpassing 108,000 points, the Stock Exchange closed with a more moderate rise this Wednesday (12). Investors took their foot off the accelerator in the purchase of shares after the minutes of the last meeting of the Fed (Federal Reserve, the American central bank) that defined the high of 0.25 percentage points in the interest rate in the United States.

Analysts classified the tone of the minutes of the FOMC (the committee responsible for monetary policy in the United States) as harsh. One of the points highlighted was the support of some committee members for a 0.50 percentage point increase in interest rates.

The Ibovespa closed up 0.64% to 106,889 points. At the day’s high, reached just before the release of the FOMC minutes, the index reached a high of 108,277 points. The commercial dollar in sight fell 1.31%, to R$ 4.941, after hitting R$ 4.91 at the minimum. This is the lowest closing for the US currency against the real since June 9, 2022.

In the futures market, interest rates closed with moderate increases. In the contracts for January 2024, the rates went from 13.12% at the close of this Tuesday (11) to 13.14%. For January 2025, interest rates rose from 11.76% to 11.81%. When due in January 2027, rates increased from 11.73% to 11.76%.

Several Fed members considered at last month’s rate meeting to halt rate hikes until it was clear that the failure of two regional banks would not cause further financial stress. But even these directors ended up concluding that high inflation was still the priority.

“Some participants highlighted that they would have considered a 0.50 percentage point increase (in interest rates) in the absence of recent developments in the banking sector,” the minutes said.

Fed members’ projections for interest rates point to a new high of 0.25 points at the May meeting. But some Fed officials said on Wednesday that the slowing economy could be enough to rein in inflation.

San Francisco Fed Chair Mary Daly said that while US economic strength, a tight job market and very high inflation suggest there is “more work to do” regarding the Fed’s rate hikes, other factors, including credit conditions, may call for a break.

US consumer prices rose slightly in March as the cost of gasoline fell, but high rents maintained inflationary pressures.

The consumer price index rose 0.1% last month, after advancing 0.4% in February, the Labor Department said on Wednesday (12).

In the 12 months through March, the index advanced 5.0%, the weakest result since May 2021. In February, inflation had risen.

Excluding volatile food and energy components, the CPI rose 0.4% last month, after rising 0.5% in February. Rents continued to drive the so-called core index

Despite this deceleration in inflation, analysts believe that the Fed (Federal Reserve, the US central bank) will decide for another 0.25 percentage point increase in interest rates at the meeting scheduled for May. In addition, it is expected that the start of the cycle of cuts will take longer to start, as the price index is still far from the target of 2% per year.

Weighing all the information, US investors opted for caution. The Dow Jones Industrial Average closed down 0.11%. The S&P 500 fell 0.41%, while the Nasdaq, more sensitive to forecasts on interest rates and growth, fell 0.85%.

Another inflation data that helped the performance of the Exchange this Wednesday is the first preview of the IGP-M (General Price Index – Market) of April, with deflation of 0.9%, compared to a fall of 0.2% in the same March preview, as highlighted by the Mirae Asset team in a report.

The new fiscal framework also continues to be one of the factors contributing to this good moment for the Stock Exchange.

Chairman of the board of directors and senior partner of BTG Pactual, André Esteves says he views the government’s presentation of the fiscal framework positively.

According to the banker, the proposed new fiscal rule removes the risk of the country moving towards the Argentine model, with an unsustainable debt trajectory, and tends to contribute to changing the level of the Brazilian market in terms of asset prices on the Stock Exchange , in the dollar or in interest.

“I liked the fiscal framework. And I think it has some subtleties that, for me, are even more important than the measure itself,” said Esteves, during an event promoted by BTG Pactual this Wednesday (12).