Dollar falls, with an eye on the fiscal framework; see quotation – 04/18/2023 – Market

On a day of emptied indicators in Brazil and the United States, the dollar opened in decline this Tuesday (18). Investors’ attention is focused mainly on the delivery of the proposal for a new fiscal framework to Congress, which was already expected for this Monday (17th), and on China’s GDP (Gross Domestic Product) in the first quarter.

At 9:26 am (Brasília time), the spot dollar retreated 0.23%, to R$ 4.9268 in the sale. On B3, the dollar futures contract for the first month fell 0.33% to R$4.9335.

The index that compares the dollar to a basket of strong peers was down about 0.40% this morning after data showed China’s GDP grew 4.5% in the first three months of the year from the same period a year earlier. .

The result beat analysts’ forecasts for a 4.0% expansion and marked the strongest growth in a year, as the end of strict restrictions against Covid relieved companies and consumers affected by the problems caused by the pandemic.

China is Brazil’s biggest trading partner, which explains the real’s sensitivity to news involving the second largest economy in the world.

On Monday, the Stock Exchange closed down, while the dollar rose. On a day without many relevant indicators here and in the US, investors are waiting for news about the new fiscal framework, or signals about interest rates.

The Ibovespa closed down 0.25% to 106,015 points. The spot commercial dollar ended the day up 0.40%, at R$4.936.

In the futures markets, interest rates were close to stability. Contracts maturing in January 2024 increased from 13.19% at the close of last Friday (14) to 13.21%. For January 2025, the rate rose from 11.88% to 11.89%. Upon maturity in January 2027, interest dropped from 11.74% to 11.73%.

This week is shorter in Brazil, with the Tiradentes holiday next Friday (21). Until then, some important events and indicators will remain in the sights of investors.

Emphasis on the consumer inflation index in the Euro Zone and the Beige Book, a document from the Fed (Federal Reserve, the US central bank) that deals with the economic environment in the United States and may give signals about interest rates. Both leave next Wednesday (19).

This Monday, analysts consulted by the Central Bank began to see a greater easing of monetary policy this year, at the same time that they raised the perspective for inflation in 2023 above 6%.

The Focus survey released by the Central Bank points out that the expectation now is that the basic Selic interest rate will end this year at 12.50%, from 12.75% before.

Another important data released by the BC this Monday was the economic activity in January. The IBC-Br had a decrease of 0.04% in January compared to the previous month, according to seasonally adjusted data for the indicator.

Investors are waiting for the proposed new fiscal framework to be sent to Congress. Last Friday (14), the PLDO (Budget Guidelines Bill) for 2024 was sent, which conditions some expenses to the approval of the new rules.

The PLDO foresees the possibility of expanding spending by R$ 172 billion above what is allowed by today’s rules. The value can be used if the new law for public accounts is approved, being proposed by the government, which aims to implement a regime for expenses that is more flexible than the current ceiling rule.

The Minister of Finance, Fernando Haddad, said this Monday that he believes that the fiscal framework will be sent to Congress on Tuesday, but considered that “it could be delayed”, adding that the sending depends on the Civil House and the presidents of the Chamber of Deputies and the Senate.

The highlight of the fall within the index was the common stock of 3R Petroleum, which closed down 15.69%. The company announced, this Sunday night (16), a capital increase between R$ 600 million and R$ 900 million, with the issuance of new shares.

In the United States, stock indices in New York fluctuated a lot during the day, and closed with slight increases. The dollar also appreciated against other major global currencies, with the DXY index rising 0.53% by 5:20 pm (Brasília time).

Investors are waiting for the results of banks and large companies in the first quarter of 2023, to try to get clearer signs of how the Fed will conduct interest rate policy from the meeting scheduled for May.

The Dow Jones Industrial Average closed up 0.30%, while the S&P 500 gained 0.33%. The Nasdaq ended the day up 0.28%.

Still abroad, Airbus shares rose 1.47%, and Air France advanced 2.07% on the Paris Stock Exchange. That’s after the Paris appeals court acquitted the planemaker and airline after 14 years of manslaughter, not killing, for the crash of Flight 447 into the sea in 2009.

With Reuters