Spot dollar falls 0.34% after inflation readings in the US and Brazil

The spot dollar ended the session this Thursday, 11th, down 0.34%, quoted at R$ 4.8752, having touched the level of R$ 4.85 at the day's low (R$ 4.8593 ). According to traders, the rise in oil prices and inflows of external resources practically isolated the real from the volatility observed in the global currency market, following the slightly higher-than-expected reading of consumer inflation in the US in December.

Even in moments of strengthening of the American currency abroad in relation to peers, such as the euro, and most emerging currencies, especially in the morning, the real showed strength. Aside from occasional and very restricted increases at the opening of business and in the early afternoon, when it touched R$4.89, the dollar operated lower here throughout the day.

Outside, the DXY index rose for most of the session and tried to approach 103,000 points, with a maximum of 102,764 points. At the end of the afternoon, however, the Dollar Index lost steam and started to work slightly lower, in line with the behavior of Treasuries. The American currency also retreated in relation to emerging markets, with stronger losses (greater than 0.60%) in comparison with two Latin American real pairs, the Chilean and Colombian pesos.

The most anticipated indicator of the week, the consumer price index (CPI) rose 0.3% in December, slightly above expectations (0.2%). The core – which excludes more volatile items such as energy and food – rose 0.3%, in line with expectations. Annual CPI readings in December came in above expectations, rising 3.2% for the full index and 3.8% for the core. Tomorrow, the producer price index (PPI) for December will be released.

The CPI reading did not cause significant changes in bets regarding the direction of American monetary policy. CME Group's platform shows that the chances of an initial interest rate cut by the Federal Reserve in March remain the majority, above 60%, although well below what was observed at the end of 2023, when they exceeded 80%.

Here, the IBGE announced in the morning that the IPCA accelerated from 0.28% in November to 0.56% in December, above the median of the Projeções Broadcast survey, of 0.49%. There was an increase in diffusion and a more pressured reading of services and underlying assets, attributed more to seasonal issues that do not alter the commitment to continuing the disinflation process.

For Remessa Online's economic consultant, André Galhardo, December's IPCA brought some discomfort and showed that “inflationary risks have not yet been overcome”, but it did not change “the market's perception in relation to the conduct of monetary policy” and the cuts followed by the Selic rate.

“It is ambiguous data and can raise a warning signal. On the other hand, we achieved the inflation target after two years of explosion (2021 and 2022)”, says Galhardo, who projects IPCA of 3.9% in 2024. “With the Selic rate between 9.5% and 9 75% at the end of the year, still in a restrictive environment, we will have a high real interest rate that benefits the exchange rate. My basic scenario is that the process of appreciation of the real and dollar by R$4.50 will continue.”