07/18/2024 – 10:15
The dollar rose against the real this Thursday, the 18th, hovering around 1%, as investors resume defensive positions in Brazil amid heightened market concerns about the adjustment of Brazil’s public accounts.
At 10:14 am, the spot dollar rose 0.98% to 5.5387 reais for sale. On B3, the first-maturity dollar futures contract rose 0.89% to 5.547 reais for sale. See quotes.
This week, the US currency has accumulated gains against the real after statements by President Luiz Inácio Lula da Silva on Tuesday in which he questioned compliance with the fiscal framework if there are “more important things to do”.
The president’s statements in an interview with TV Record rekindled market fears about the government’s commitment to fiscal balance, days before the release of the Revenue and Expenditure Assessment Report for the third two-month period, in which the Executive will need to indicate how it intends to meet the zero deficit target this year.
The day before, the dollar closed the day at 5.4850 reais for sale, up 1.03%.
Earlier, the Minister of Planning and Budget, Simone Tebet, said that Lula determined that the government should not spend more than it collects, a premise that, according to her, should be reflected in the Budget for next year.
“We have a commitment to the country, as determined by the president and the economic team, not to spend more than we earn,” said Tebet in an interview with the program “Bom dia, ministra”, on CanalGov.
The minister’s comments did not appear to provide any relief to investors.
“It was a good signal in terms of speeches, but the market is a little skeptical about whether this will actually be put into practice,” said Gabriel Mota, variable income operator at Manchester Investimentos.
“That (Tebet’s statements) should relieve some of the pressure, but that’s not something we’re seeing right now,” he added.
External scenario
On the external front, markets were analyzing the European Central Bank’s interest rate decision and unemployment benefit data in the United States.
The euro zone’s monetary authority decided to keep its deposit rate unchanged at 3.75%, as expected by analysts, after a 25 basis point cut at the previous meeting that had started a long-awaited monetary easing cycle.
ECB officials also reiterated their commitment to returning euro zone inflation to its 2% target, saying interest rates would remain sufficiently restrictive for as long as necessary. They did not signal how they would proceed at future meetings.
Investors were also digesting new U.S. jobless claims data that came in better than expected, reinforcing the argument that the labor market is moderating.
The Labor Department reported that initial claims for state unemployment benefits rose 20,000 from the previous week to 243,000, above the 230,000 expected by experts polled by Reuters.
The data, added to more benign inflation figures in the second half of the year, should reinforce expectations of an interest rate cut by the Federal Reserve in September.
Traders are pricing in an initial cut in September, with the possibility of two more cuts by the end of the year. The more the U.S. central bank cuts rates, the worse it is for the dollar, which becomes comparatively less attractive when Treasury yields fall.
Despite the figures, the dollar index — which measures the performance of the US currency against a basket of six currencies — rose 0.22% to 103.900.
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