Dollar has a slight fall after the previous day’s surge

The dollar fell modestly against the real shortly after the opening on Wednesday (14), with investors pausing the flight-to-safety move seen the day before, after data showed an unexpected rise in US consumer prices, as they awaited more figures. of inflation in the world’s largest economy, this time to the producer.

The August reading of US producer prices will be released at 9:30 am (GMT).

At 9:07 am (GMT), the spot dollar retreated 0.29%, to R$ 5.1752 on sale.

On B3, the first-maturity dollar futures contract dropped 0.15% to R$5.2000.

Stock markets collapsed on Tuesday (13) after the United States announced in the morning that inflation in the country rose 0.1% in August compared to July. In the 12-month period, the rise in prices was 8.3%.

The CPI, an acronym for consumer price index, was widely expected to show deflation. The Bloomberg agency projected a negative rate of 0.1% in the month and, in the accumulated in 12 months, pointed out that the index would fall from 8.5% to 8.1%.

As it better demonstrates the persistence of rising prices in the US, the August core inflation, which excludes volatile items such as food and energy, rose 0.6% and started to accumulate an advance of 6.3% compared to 5, 9% registered in July.

In New York, the S&P 500 indicator fell 4.32% and the Nasdaq, which concentrates companies that rely more on cheap credit to grow, sank 5.16%. The Dow Jones, which brings together 30 large American companies, plunged 3.94%. The three indices had their worst day since June 2020.

The Brazilian Stock Exchange dropped 2.30%, with the Ibovespa index falling to 110,793 points.

In the Brazilian exchange, the dollar jumped 1.80%, quoted at R$ 5.1890. Earlier, it came close to R$ 5.21. The American currency also showed a strong increase in relation to the main currencies.

The course of American inflation is essential for the formation of consumer prices and interest rates in Brazil as well. This goes beyond the inflationary pressure exerted by the high exchange rate on the values ​​of raw materials quoted in dollars and imports.

The cost of credit in Brazil depends on the rate in the United States. To attract and keep investments here, the country needs its sovereign bonds to offer interest rates high enough to compensate for political and economic instability.

American interest rates are currently at 2.5%. In Brazil, the basic Selic rate is 13.75% per year.

Without the expected reduction in the CPI, the market starts to expect the Fed (Federal Reserve, the American central bank) to continue to raise interest rates in the country quickly.

Raising interest rates is a measure adopted by central banks to curb inflation. More expensive credit reduces the circulation of money, and prices tend to fall. A side effect is rising unemployment. In the United States, however, there are almost two openings for every person looking for work.

Next Wednesday (21), the Fed is expected to announce a further increase in its interest rate. The market expected an increase between 0.50 and 0.75 percentage point. But after the August inflation surprise, analysts are even considering a 1 percentage point increase.

Last week, Jerome Powell, chairman of the Fed, said the United States must continue to act energetically to reduce demand and contain pressure on prices to avoid a spike in inflation like the one seen in the 1970s and 1980s.

with Reuters