Dollar falls after US inflation data, but domestic environment warns Reuters

By Luana Maria Benedito

Sao Paulo (Reuters) – The domestic political situation continued to affect some investors, but on the back of weaker-than-expected data, the currency’s profit returned in the first few minutes and began to fall slightly against reality on Tuesday. .

At 10:15, the dollar retreated 0.10%, returning to 5.2182 selling, while the most liquid contract fell 0.11% to 5.2285 reex.

The U.S. currency began its devaluation after 9:30 a.m. The U.S. Department of Labor announced that the U.S. currency had risen to its slowest pace in six months in August, indicating that inflation is likely to peak.

The weaker-than-expected data suggest that inflation in the world’s largest economy is temporary and supports the view of Jerome Powell, the leader who supports the arguments in favor of patience in mitigating the US Federal Reserve.

“The surprise was small, but it allowed for indirect inflation in the US (interest) curve and the nominal curve …”, Arthur Lula Motta from Strategy and Macro Research on the BTG Pactual wrote in a post on Twitter (SA 🙂 Digital. “The world dollar has also lost strength.”

Overseas, one basket of coins fell 0.30% to 92,346.

“It is true that the dollar is weakening in the world because of US monetary policy,” Alexander Espirido, chief economist at Arama Investmentos, told Reuters. “At the same time, we’re in an upward movement in prices, which should continue, which is good for real ones from a perspective of rate difference.”

With Brazilian base interest rates expected to be higher than those found in advanced economies, the domestic fixed income market will be more attractive to foreign investors, which could boost dollar credit to parents. According to the Central Bank’s weekly focus survey, the market base interest rate is expected to reach 8% by the end of this year and 2022.

However, Espirido Santo said the local background continues to provide uncertainty on many fronts, mainly in the political and financial spheres. “Next year is an election year, a particularly difficult year. The country has cracked so much that, historically, in election years, the dollar will rise.”

To the economist, the current level of the dollar, between 5.20 and 5.30 ray, is the “reasonable number” at the moment, but amid doubts about what the court order bill for 2022 will look like, next year the currency could reach 5.50 ray. How the government’s reform agenda will be resolved and progressed.

“Fluctuations open up and the market and uncertainty do not mix,” he added.

On market radar this Tuesday, the head of the central bank, Roberto Campos Neto, announced at the end of the year that the PC would probably have to operate at an exchange rate due to the need associated with the removal of additional costs (protection of additional exchange banks).

Earlier, the US spot currency fell 0.84% ​​to 5.2236.