Dollar accompanies exterior and has a slight high against real

The dollar rose slightly against the real on Thursday morning (15), in line with movement seen abroad as fears about a very aggressive monetary tightening by the US central bank continued to impose caution.

In Brazil, investors digested data much better than expected from the IBC-Br (an indicator of economic activity of the Central Bank) for July, which rose 1.17% over the previous month.

At 9:13 am (GMT), the spot dollar advanced 0.17%, at R$ 5.1873 on sale.

On B3, at 9:13 am (GMT), the first-maturity dollar futures contract rose 0.39% to R$5.2080.

In the last session, the dollar had a small downward adjustment, with a slight drop of 0.19%, quoted at R$ 5.1790, but only partially offsetting the 1.8% advance on Tuesday (13), in in the wake of increased risk aversion caused by inflation data in the United States.

The Brazilian stock index Ibovespa, on the other hand, moved away from the stock exchanges in the United States, which experienced a slight recovery on Wednesday (14) after the fall in the previous trading session, and ended business down 0.22%, at 110,546 points.

The local market stock index was pressured by companies in the consumer sector after lower-than-expected retail sales data. Magazine Luiza’s shares dropped 5.11%, while Via’s shares fell by 3.56%, and Americanas’ shares dropped by 1.8%.

The IBGE (Brazilian Institute of Geography and Statistics) reported this Wednesday that Brazilian retail sales fell in July, the third consecutive drop in trade over the previous month. Sales were down 0.8% over June, seasonally adjusted, the biggest decline for the month since 2018 (-0.9%). In comparison with July last year, retail shrank 5.2%.

The expectation in a Reuters poll was up 0.30% on a monthly basis and down 3.50% over a year earlier.

Metal commodity exporters also contributed to the drop in the Ibovespa – Gerdau shares dropped 3.72%, Usiminas dropped 3.17%, and Vale, 1.83%.

The move was in line with the 1.1% drop in iron ore on the international market, which in turn reflected the devaluation of Asian stock markets, with investors in the region digesting the US inflation data released the day before.

The rise in Petrobras shares, 1.53% for preferred shares, and 1.20% for common shares, following the movement of oil prices on the international market, prevented a more expressive drop in the local stock market.

US stocks partially recover from losses recorded in the previous session

In the foreign market, shares in the main US stock exchanges operated under intense volatility, alternating between losses and gains, after the sharp drop registered on Tuesday, caused by inflation data in the United States.

Towards the end of the session, the main stock indices of the American market ended up firming in the positive territory, with gains of 0.34% for the S&P 500, 0.10% for the Dow Jones and 0.74% for the Nasdaq.

The rise, however, only partially offset the drop seen on Tuesday (13), when the indices fell by 4.32%, 5.16% and 3.94%, respectively, the biggest since June 2020.

The fall came on the heels of strong risk aversion that dominated markets in the previous session, as US inflation data above expectations renewed investors’ fears about a more aggressive monetary tightening by the Federal Reserve. (Fed), the US central bank.

“The fear of an economic slowdown intensified in the market, bringing again the feeling of aversion to risk”, said Antônio Sanches, analyst at Rico Investimentos.

US inflation rose 0.1% in August compared to July. In the 12-month period, the rise in prices was 8.3%.

Market analysts had expected the CPI, an acronym for consumer price index, 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.

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.

“In the terminal rate forecast, there is already talk of 4% or more. The peak of inflation may not have been shown yet and it is an arduous battle to be won, even because the cores continue to be pressured”, points out Julio Hegedus Netto, economist head of Mirae Asset, in a report.

Without the expected reduction in the CPI, the market starts to expect the Fed to continue to raise interest rates quickly in the country.

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