Dollar retreats amid strong oil; US agenda and fiscal risk are in focus

The dollar pulls back amid persistent high oil. Local investors will pay attention in the next few hours to the external agenda, which is stronger, but also to the meetings of the Minister of Finance, Fernando Haddad, in Davos, Switzerland, and discussions on the minimum wage.

On Tuesday (17), the dollar closed down, returning part of the high of the previous session in the face of greater risk appetite for emerging countries and less fiscal concern.

President Luiz Inácio Lula da Silva participates in the installation of a minimum wage negotiation table with trade union centrals (11 am). The Minister of Labor, Luiz Marinho, will deliver to Lula this Wednesday (18) a proposal made by trade unionists to create a rule for readjusting the minimum wage.

According to the unionists’ calculations, the floor should be R$ 1,342 in 2023 – the current value is R$ 1,302. The centrals press for at least the R$ 1,320 foreseen in this year’s budget to prevail. A government source said on Tuesday that the minimum wage would remain at R$1,302 “for the time being”, according to Valor Econômico newspaper.

The Minister of Finance, Fernando Haddad, said yesterday in Davos that the debate on the new Brazilian fiscal rule will open in February. His statement comes amid demands from international investors seeking more details about the anchor that will be adopted in Brazil in place of the spending cap. According to the minister, the decision on raising the minimum wage is up to the government and will be taken after negotiations with the union centrals.

Regarding the tax reform, Haddad stated that the debate on the income tax on profits and dividends will be left for the second half of the year and that the objective, now, is to proceed with the tax reform on consumption, which is already under broad debate in Congress.

Abroad, the DXY index, which measures changes in the US currency against six other relevant currencies, retreated early and the dollar also depreciated against emerging currencies in real DP pairs, such as the Mexican peso, the Chilean peso and the South African rand. The course of local assets on the day should depend on the reaction of investors in the coming hours to the American agenda full of indicators and speeches by Federal Reserve officials (Fed, the US central bank). Also on Wednesday, the Fed releases the Beige Book on regional economic conditions.

Earlier, the Bank of Japan (BoJ) left its monetary policy unchanged, which helps boost the dollar against the yen.

At 9:17 am this Wednesday, the dollar in sight fell 0.34%, to R$ 5.0878. The dollar in February retreated 0.28%, to R$ 5.0990.