Follow the dollar on Copom and Fed decision days – 03/22/2023 – Market

The so-called “Super Wednesday” starts with the dollar in stability after opening. The market expects for this Wednesday (22) the decision of the Fed (Federal Reserve, the American central bank) and the Central Bank of Brazil on the interest rates of both countries.

In the United States, the result of the meeting of the Fomc (committee that meets to define interest rates) comes out at 3:00 pm (Brasília time). The Copom (Monetary Policy Committee) decision is expected to be released after 6:00 pm.

At 9:02 am (Brasília time), the spot dollar advanced 0.04%, to R$ 5.2475 in the sale.

On B3, at 9:02 am (Brasília time), the first contract dollar futures contract rose 0.07%, to R$ 5.2595.

Even before the opening of the markets, the day began with a speech by another important world monetary authority. Christine Lagarde, President of the ECB (European Central Bank) spoke this Wednesday morning.

The Stock Exchange and the dollar closed close to stability this Tuesday (21). During the day, the market even followed a more positive trend, following the outside. But new criticisms by President Luiz Inacio Lula da Silva (PT) of the Central Bank once again turned on a warning sign among investors.

The Ibovespa closed the day at a slight increase of 0.07%, at 100,998.13 points. The spot commercial dollar had a similar performance, with an advance of 0.09%, at R$ 5.247. The currency reached R$ 5.21 at the low of the day.

In the interest rate market, investor behavior was similar. In contracts for January 2024, the rate went from 12.98% at the close of this Monday (20) to 13.02% per annum. For January 2025, interest rates rose from 12.08% to 12.13%. In contracts for January 2027, the rate was practically stable, changing from 12.44% to 12.45%.

President Lula once again put pressure on the Central Bank and attacked the Selic (basic interest rate) in Brazil, stating that it is “irresponsible” to keep it at the level of 13.75%. Lula said he will continue “hitting” and “trying to fight” so that it can be reduced.

Lula also attacked BC president Roberto Campos Neto again, although he did not mention him by name. The Chief Executive stated that he cannot dismiss him, as it depends on the Senate to end his term. However, he added that he does not care about the terms laid down in the legislation that provides for BC autonomy.

Another point of caution for investors is the uncertainties about the parameters for the new fiscal rules. This factor was decisive for the fall of the Ibovespa this Monday (20), and according to analysts, much of the caution in relation to the announcement has already been placed in the prices of local assets.

President Lula indicated this Tuesday that the government will not be in a hurry to present the new fiscal rule, which should be made public after the return of the presidential trip to China, from March 26 to 31.

Lula stated that the package cannot be announced before he and Minister Fernando Haddad (Finance) leave on a trip, without providing the necessary explanations. However, he stressed that the proposal is already “mature”.

The lack of definition around the parameters is behind the postponement of the official announcement. According to interlocutors interviewed by the Sheetthere are a series of pending strategic decisions, which are decisive for knowing what space the government will have to spend in the future.

Petrobras shares helped the Ibovespa maintain the slight rise at the close. Oil rose for the second day in a row, after the price fell nearly 12% last week. The barrel of the Brent type was up 2% at 17:00 (Brasília time). The state-owned company’s common and preferred shares closely followed this pace, also closing with increases of around 2%.

Banks rose, reflecting investors’ greater relief with the situation in the international financial system. The developments of the purchase of Credit Suisse by UBS and the actions of the authorities to save US banks in trouble justify the most positive reaction this Tuesday.

Janet Yellen, secretary of the US Treasury, says that new measures can be taken to protect account holders in the event of a drain of resources in smaller banks. According to Yellen, the latest moves by US authorities showed a “resolute commitment to take the necessary steps to ensure that account holders’ savings and the banking system remain safe.”

Even the First Republic Bank stock, which until yesterday had accumulated a 90% drop in March, this Tuesday recovered part of these losses and rose almost 30%. The roles of major banks in the country, such as Goldman Sachs, JPMorgan, Morgan Stanley and Citigroup, advanced between 2% and 3%.

In New York, the Dow Jones index closed up 0.98%. The S&P 500 rose 1.30%, and the Nasdaq ended the day up 1.58%.

Stocks in Europe also rose. The Euro Stoxx 50 closed up 1.51%. Also noteworthy are the FTSE 100, of the London Stock Exchange, up 1.79%, and the DAX, from Frankfurt, which advanced 1.75%.

The roles of Brazilian banks, which suffered less than their international peers last week, follow the upward trend. Highlight for the preferred share of Itaú Unibanco, which closed up 2.30%, and for the Unit of Santander Brasil, up almost 2%.