Dollar drops against real as market awaits US inflation data

The dollar retreated against the real in the first trades this Wednesday (13), in line with the international cooling of the North American currency, while market participants around the world awaited the release, at 9:30 am (GMT), of data from US inflation.

At 9:07 am (GMT), the spot dollar retreated 0.31%, to R$ 5.4225 on sale.

On B3, at 9:07 am (GMT), the first-maturity dollar futures contract dropped 0.32% to R$5.4495.

In the last session, market fears about a recession in the economies of developed countries over the next few months returned to weigh on the mood of investors, with the dollar having a new session of appreciation this Tuesday (12). The shares on the main global stock exchanges operated without a clear defined trend.

Investors’ concerns about the energy shock in Europe made the euro reach parity against the dollar the day before for the first time since 2002. The Old Continent’s currency has depreciated around 14% in 2022.

In the Brazilian market, the American currency recorded a rise of 1.24% against the real, trading at R$ 5.4390 for sale.

On the Stock Exchange, the broad stock index Ibovespa oscillated under intense volatility throughout the session, closing close to stability, with a slight increase of 0.06%, at 98,271 points, pressured down by commodities exporters such as Petrobras, but sustained in the positive field by retail companies.

Magazine Luiza jumped 11.4%, Via advanced 9.44% and Americanas rose 8.26%, with better-than-expected data from the service sector and market expectations regarding the approval of the Benefits PEC, which tends to bring a breath for family income.

In the American market, the main stock exchanges also had a trading session between highs and lows during the day, but closed in the negative field. The S&P 500 fell 0.92%, the Nasdaq dropped 0.95% and the Dow Jones lost 0.62%.

Weak data in Germany push euro to par against the dollar

According to Guide Investimentos analysts, the fear of a global scale recession continues to act as the main point of concern for investors, since, if confirmed, it could bring a new round of correction in the prices of risky assets.

The data released this Tuesday in Germany helped to reinforce the sentiment of greater caution.

The Zew economic sentiment index, an important indicator of confidence in the German economy, plummeted 25.8 points and reached the lowest level since the subprime crisis in the United States in 2008, at -53.8 points.

“The main catalyst for this worsening continues to be the energy crisis that the largest economy in the European bloc is experiencing, which still has as an aggravating factor the possibility of the suspension of activities of the Nordstream I gas pipeline indefinitely by Russia”, point out Guide analysts in a report. .

After the figures on the German economy, the euro accentuated the losses that have been occurring since the beginning of the year against the dollar, reaching parity against the US currency, which had not happened since 2002.

The market even traded the European currency at US$ 1 at 6:50 am Brasília time, with the fear of a worsening of the energy crisis in Europe due to the interruption of the flow of Russian gas. The tension fuels fears of a recession in Europe. At the close of the session, the euro’s fall against the dollar weakened, with the European currency trading at USD 1.0062.

“In times of uncertainty and risk aversion, the dollar works as the world’s great store of value. That is, even if the American economy weakens, economic agents make the “flight to safety” (flight to quality), the that reinforces the currency’s appreciation in relation to its peers”, says Nicole Kretzmann, chief economist at Upon Global Capital.

She adds that, given the prospect that the energy crisis in Europe is likely to continue for a few quarters and that the fear of recession will continue, it is more likely that this scenario of the euro running close to parity against the dollar should be the “new normal” for a while longer.

PEC vote on Benefits and service sector highlighted in the local market

In the local market, the attention of investors remained focused on the vote on the PEC (proposed amendment to the Constitution) on Benefits in the Chamber of Deputies.

This Tuesday, the Chamber of Deputies approved the basic text of the PEC that authorizes the government to create a voucher for truck drivers and taxi drivers, double the value of Auxílio Gás and increase Auxílio Brasil to R$ 600 by the end of the year, at a cost estimated at R$ 41.25 billion.

The basic text was approved by 393 to 14 — at least 308 votes were needed. The text institutes a state of emergency, allowing President Jair Bolsonaro (PL) to pierce the spending ceiling and open public coffers without running into restrictions of the electoral law three months before the election.

The Planalto is in a hurry to start paying benefits, given the proximity of the election. Bolsonaro is in second place in polls, behind Luiz Inácio Lula da Silva (PT).

​On the indicator agenda, the volume of the service sector in Brazil grew by 0.9% in May, compared to April, the IBGE (Brazilian Institute of Geography and Statistics) reported this Tuesday.

The result was above financial market estimates. Analysts consulted by the Reuters agency projected an advance of 0.2% in the monthly comparison.

As a result, service provision was 8.4% above the pre-pandemic level of February 2020. However, it is still 2.8% below the highest point in the historical series, reached in November 2014.

“The loosening of mobility restriction policies, together with the increase in household disposable income, continue to drive demand for these services in the short term”, highlights Rodolfo Margato, economist at XP.

With Reuters and AFP