Follow the dollar rate this Wednesday (17) – 05/17/2023 – Market

The dollar was high on the morning of this Wednesday (17) after having broken a sequence of declines the day before. Investors are monitoring negotiations to raise the US debt ceiling and following the course of the fiscal framework in the Brazilian Congress.

At 11:15 am, the dollar was up 0.92%, at R$4.952. The DXY index, which measures the performance of the dollar against other strong currencies, rose 0.46%.

The rapporteur for the text of the fiscal framework, Claudio Cajado (PP-BA), presented his opinion on the proposal on Monday (15), with the forecast of approval of the urgency regime for the project this Wednesday. The expectation is that the new tax rules will be voted on next week.

Cajado said on Tuesday (16th) that the proposal provides for administrative sanctions against the President of the Republic in case the federal government fails to meet the target and that the policy of valuing the minimum wage and resources for the Bolsa Família program will be outside the scope of new rule.

“In general, the changes presented brought some reinforcement for compliance with the rules, but with some flexibility for the growth of expenses in the short term”, evaluated Bradesco.

The day’s agenda also includes the release of data on the weekly exchange rate in Brazil by the Central Bank (BC).

In the United States, the White House said earlier that President Joe Biden would continue to talk to congressional leaders about the debt limit later this week and would meet with them again after returning from a trip to attend the G7 summit.

On the eve, the main Republican lawmaker of the US Congress, Kevin McCarthy, said that it is possible to reach an agreement by the end of the week, but caution remains with the fear of an imminent default in the world’s largest economy.

The Brazilian stock exchange closed down on Tuesday (16), driven by a fall of more than 20% in the shares of Magalu. The dollar, on the other hand, rose and returned to the level of R$ 4.90.

The Ibovespa fell by 0.77%, reaching 108,193 points, while the dollar rose by 1.06%, closing the day at R$4.942.

The index registered gains at the beginning of the day, driven especially by Petrobras, which rose 2.41% in preferred shares and 2.48% in common shares after the announcement of its new fuel price policy.

Weighed against the Ibovespa, however, the shares of Vale, which closed down 2.17%, and Magalu, which fell almost 23% after the company reported a loss in the first quarter. The two companies were among the most traded in this Tuesday’s session.

Futures markets continued to rise. Contracts maturing in January 2024 increased from 13.30% to 13.31%. Those for 2025 rose from 11.67% to 11.73%, and those for 2026 rose from 11.12% to 11.22%.

The dollar rose again after having closed at the lowest level in almost a year on the eve, supported mainly by data from the Chinese economy and forecasts of improvement in the United States.

China’s National Bureau of Statistics reported that industrial production in the country rose by 5.6% in April from a year earlier. Analysts polled by Reuters had projected a rise of 10.9%. Retail sales jumped 18.4% in April, but analysts had expected growth of 21.0%.

Furthermore, optimism about the US economy also supported the dollar.

The US Commerce Department said retail sales rose 0.4% in April, missing estimates for a 0.8% increase. But core retail sales, a figure that excludes autos, gasoline, building materials and food services, rebounded.

Also on Tuesday, the Federal Reserve reported that US industrial production jumped in April, driven by an increase in motor vehicle production.

Discussions on the debt ceiling, however, continue to lead American investors to be cautious. Parliamentarians held a new round of negotiations on the subject, but there is still no prediction of when the situation will be resolved.

As a result, US indices closed lower. The Dow Jones, S&P 500 and Nasdaq all fell 1.01%, 0.64% and 0.18% respectively.

(With Reuters)