Global dollar retreats to the lowest level since April 2022

Inflation

Indicator that measures dollar variation started the week around 102 points

The DXY index, which measures the dollar’s change against a basket of six other major currencies, closed last week with a 15-month low since April 2022.

The indicator had started the week around 102 points. On Friday (14), it dropped to 99 points.

According to market analysts, the movement is mainly due to the deceleration of inflation in the United States, which fueled expectations that the Federal Reserve (Fed, the American Central Bank) will soon start the cycle of falling interest rates.

According to data released last week by the US government’s Department of Labor, inflation decelerated from 4% in May to 3% in June, on an annual basis. This is the lowest level of inflation in the country in more than two years, since March 2021.

Despite the market’s optimism, Fed Chairman Jerome Powell and monetary authority officials have already made it clear that there should be at least two more interest rate hikes by the end of the year, probably by 0.25 percentage points each.

The Fed’s Monetary Policy Committee opted, at the last meeting, to keep the US interest rate between 5% and 5.25% a year, in the first break after 10 consecutive high meetings. Raising interest rates is the main instrument used by central banks to contain inflation.

In the last trading session of last week in Brazil, the dollar advanced 0.11%, trading at R$ 4.795. As a result, the US currency accumulates gains of 0.13% in July and losses of 9.15% in 2023.

*With information from Metrópoles

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