Dollar opens sharply lower with improvement in Brazil’s credit rating

The previous day, the North American currency advanced 0.31%, quoted at R$5.4640. The stock exchange’s main stock index closed up 0.51%, at 132,495 points. Pixabay The dollar opened sharply lower this Wednesday (02) after the risk rating agency Moody’s raised Brazil’s credit rating, with positive prospects that could take the country to the so-called “investment grade”. See below for a summary of the markets. REASONS: Ibovespa has had the best month since November, but the dollar is not following the enthusiasm DOLLAR: When is the best time to buy the currency? Dollar At 9am, the dollar fell 1.04%, quoted at R$5.4070. See more quotes. The previous day, the currency rose 0.31%, quoted at R$5.4640. With the result, it accumulated: increase of 0.51% in the week; increase of 0.31% in the month; gain of 12.60% in the year. Ibovespa Ibovespa starts operating at 10am. The day before, the index rose 0.51%, to 132,495 points. As a result, it accumulated: losses of 0.18% in the week; increase of 0.51% in the month; and a drop of 1.26% in the year. What is moving the markets In the domestic scenario, the highlight of this Wednesday is the repercussion among investors of the increase in Brazil’s credit rating by the risk rating agency Moody’s. This Tuesday, the agency raised Brazil’s rating from Ba2 to Ba1, with a positive outlook, and placed Brazil one step away from investment grade, a seal that classifies the country as a good payer and with a low risk of default. The Ba1 rating still indicates a speculative grade. In other words, the country is less vulnerable to short-term risks, but with important uncertainties on the radar. In the case of Brazil, the improvement mainly reflects the more significant growth in the Gross Domestic Product (GDP) — which increased 1.4% in the second quarter, well above expectations — and recent economic and fiscal reforms. On the other hand, the fiscal scenario still raises Moody’s alert. Paulo Gala, chief economist at Banco Master, says that, at a time when the whole world is facing problems with high debts, Brazil is “no different.” “Yes, there is a problem of fiscal pressure in the Brazilian economy. The government is spending a lot”, says Gala. “Moody’s recognizes the Ministry of Finance’s struggle to honor the fiscal framework, but there are challenges that are not small.” However, it reinforces the view that the outlook is positive for the country, which could lead to a further upgrade of the rating in the future, and that, among emerging peers, Brazil’s situation generates more confidence among investors. “The country demands care, but not that much care.” In this sense, the latest fiscal data for the country is this Monday, with the fiscal statistics report from the Central Bank of Brazil (BC). The country’s public sector accounts had a primary deficit of R$21.4 billion in August. The primary deficit occurs when tax revenues fall below expenditures, disregarding interest on public debt. Despite the slight increase between July and September, the month’s result represents an improvement compared to the same period last year, when the deficit was higher, at R$22.8 billion. The Federal Government was the only entity in the research that had a deficit, of R$22.3 billion. States and municipalities had a surplus of R$435 million, while state-owned companies had a surplus of R$469 million. In the year to date, public accounts showed a negative result of R$86.2 billion, equivalent to 1.14% of GDP. For 2024, the fiscal target, set by the Budget Guidelines Law (LDO), is a deficit of up to R$13.31 billion. This represents a worsening compared to the same period last year, when a primary deficit of R$79 billion was recorded, or 1.11% of GDP. External scenario Conflicts in the Middle East are experiencing yet another moment of intensification, with Iran’s attack on Israel. After almost a year of attacks by the terrorist group Hamas on Israelis, and a war that devastated Palestine, the confrontation was escalating with the entry of the extremist group Hezbollah — which was born in Lebanon, is financed by Iran and is an ally of Hamas. For a week now, Israel has been bombing areas of Lebanon. This Tuesday, it launched a “limited” ground operation against specific Hezbollah targets. The escalation of attacks between the two sides began after serial explosions of pagers and walkie-talkies by members of the group, who blame Israel for the attack. After Iran’s attack, oil prices on the international market soared by 5%. The rise in prices tends to benefit companies that export the commodity, such as Petrobras, which is operating sharply this Tuesday and helps keep the Ibovespa in the black. On the other hand, increased conflicts increase the climate of uncertainty among investors, who tend to migrate their investments to the dollar. The movement strengthens the North American currency against the real. Today, the market is also looking closely at yet another employment data in the United States. The JOLTS job vacancy report is a survey by the US Department of Labor that monitors and measures the number of jobs, layoffs and new openings in the country. The country created 8.04 million jobs in August, an acceleration compared to the 7.673 million registered in July and above projections. Investment analyst Vitor Miziara explains that, “as inflation is apparently under control (in the United States), the FED’s second point of attention is the labor market to decide on the next movements in the interest rate.” The country’s official annual inflation was 2.5% in September, very close to the Fed’s 2.00% target. However, a warmer labor market could put a brake on the Fed’s cycle, as more jobs imply in more money in the hands of the population and greater inflationary pressure. In this sense, Jerome Powell reinforced the institution’s intention to monitor these numbers closely and that it is not “in a rush to cut interest rates”. “It is important to note, however, that there appears to be a division on the appropriate pace for the next interest rate cut among the other members of the Committee”, highlights XP Investimentos. Therefore, the market continues to monitor the data in order to try to anticipate the Fed’s next moves. And in a week marked by several releases, the most awaited data only arrives on Friday, with the most popular jobs report in the United States , payroll. The financial market’s expectation is that the unemployment rate remained at 4.2% in September, with the creation of 144 thousand non-agricultural jobs.



Source link