Dollar heads to biggest monthly high since March 2020

The dollar advanced against the real on the morning of this Thursday (30), on its way to ending June – a period marked by global fears of recession and domestic fiscal uncertainties – with its biggest monthly appreciation since the beginning of the Covid-19 pandemic, a result which also headed the currency for a strong quarterly gain.

At 9:10 am (Brasília time), the spot dollar advanced 0.60%, at R$ 5.2225 on sale.

On B3, at 9:10 am (GMT), the first-maturity dollar futures contract rose 0.66% to R$5.2225 reais.

The day before, the dollar operated in decline against the real since the beginning of the session, starting to retreat more strongly during the afternoon, on a day in which the main global stock exchanges operated without a clear defined trend. Monetary policy in developed markets and the risk of a slowdown in the global economy remained on the radar of market agents.

In the local market, at the close of business, the US currency was down by 1.46%, trading at R$5.1900 for sale, the biggest daily drop since the 15th (-2.1%). The drop came against the 0.6% appreciation of the dollar index against a basket of currencies.

“This fall in the dollar here is already part of the beginning of the traditional fight over the Ptax rate at the end of the month, with sellers (agents who bet on the fall of the US currency against the real) since today trying to show their strength”, commented Jefferson Rugik, CEO of Correparti Corretora.

Ptax is an exchange rate calculated by the Central Bank that serves as a reference for the settlement of derivatives. At the end of each month, financial agents usually try to direct it to levels that are more convenient for their positions, whether they are long or short in dollars, which generally increases volatility.

Traders also attributed part of the dollar’s weakening in this session to a technical adjustment, after the currency closed at R$5.2671 the day before, the highest level for a close since last February 4 (R$5.3249), in its 13th advance in 16 sessions. It is natural, after significant movements in the currency, to have occasional moments of correction in the opposite direction, as traders take profits.

Despite the punctual weakening – more linked to technical factors than to the domestic or international climate, both tense this Wednesday – the dollar still advances 9.19% in the accumulated of June, and is about to mark its biggest monthly gain against the real since March 2020 (+15.92%), when financial markets around the world were shaken by the initial shock of Covid-19.

On the Stock Exchange, the broad stock index Ibovespa maintained the negative trend observed the day before and marked a 0.96% devaluation, at 99,621 points. The domestic index was pressured by the drops in the shares of large banks and Vale and Petrobras.

With such a performance, the Ibovespa now accumulates a drop of 10.53% in June, heading to record the worst monthly performance since March 2020, when it collapsed 29.9%, severely affected by the spread of the pandemic in Brazil.

In the local market, investors continued to focus on fiscal policy concerns.

The Federal Senate decided to completely abandon the text of the proposal that sought to reduce the price of fuels and rescued in its place the so-called PEC Kamikaze, with the granting of a series of benefits in an election year, at a total cost of R$ 38.75 billion.

Inflation and monetary policy were on the radar abroad

In international markets, the United States stock exchanges fluctuated under intense volatility between highs and lows, to end without a clear defined trend, after the strong losses recorded in the previous session, imposed by inflationary pressure on a global scale and the need for more rapid interest rate hikes. aggressive than initially expected to bring prices down.

In the United States, the S&P 500 closed close to stability, with a slight decline of 0.07%, while the Nasdaq dropped 0.03%. The Dow Jones was up 0.27%.

Federal Reserve Chairman Jerome Powell said on Wednesday that there was a risk that US rates could slow the region’s economy too much, but that the biggest risk was persistently high inflation starting influencing agents’ expectations for prices in the coming months.

“The clock is kind of ticking on how long you’re going to stay in a low-inflation regime…The risk is that, due to the multiplicity of shocks, you start transitioning to a higher-inflation regime, and our job is to literally prevent that from happening, and we are going to prevent that from happening,” Powell told an ECB (European Central Bank) conference.

While “there is a risk” that the Fed will slow the economy further than necessary to control inflation, “I would not agree that that is the biggest risk. The biggest mistake would be to fail to restore price stability.”

Powell said the US economy remained “in pretty strong shape” and able to cope with tighter credit conditions, avoiding recession or even a significant rise in the unemployment rate.

In European stock exchanges, the feeling of less propensity to take risk set the tone for business. The German Stock Exchange’s DAX index fell 1.73%, Paris’ CAC-40 lost 0.90% and London’s FTSE-100 lost 0.15%.

On Wednesday, Spain’s June consumer inflation was released, which stood at 1.8% from the previous month, well above expectations of 0.5%. On an annual basis, inflation reached 10.2% and further pressured the ECB (European Central Bank) to reverse the monetary stimulus.

“The prospect of a stronger monetary tightening in the United States and Europe has been hitting the equity markets since the beginning of the year. Most market analysts believe that an economic recession in these regions is likely in the second half”, say the analysts. of XP in report.

In Asia, the trading session was also marked by losses in the markets, with a drop of 1.88% in the Hang Seng, from Hong Kong, a drop of 1.54% in the CSI 300, from China, and of 0.91% in the Nikkei, from Japan.

with Reuters