O dollar in sight closed higher against the real, close to R$ 5.17, in a highly volatile trading session. The currency’s movement was gauged by the minutes of the last Federal Reserve (Fed, the US central bank) meeting and election.
Initially, the minutes were seen as “marginally dovish”, according to an analysis by Ativa Investimentos. This led the dollar to fluctuate between R$5.14, renewing the day lowsand BRL 5.17.
In the morning, the US currency reached R$ 5.21, the highest value in two weeks, in signs of risk aversion awaiting the Fed minutes.
Late minute
However, XP economist Francisco Nobre recalls that the minutes do not incorporate the latest surprises in the labor market and inflation data in the United States in July.
As a result, Nobre believes that the document was relatively less relevant for signaling the next monetary policy decisions.
Since stronger-than-expected labor market numbers raised the likelihood of another 0.75 percentage point (pp) rise.
Dovish or Hawkish?
After the release of the document, analysts are divided on the magnitude of the interest rate hike.
For Ativa’s chief economist, Étore Sanchez, the fact that several Fed members have drawn attention to a chance that interest rates will rise beyond what would be necessary is “dovish” (soft).
“But it is undeniable that reality has been imposing itself on them”, he adds.
already the Guide Investimentos economist Rafael Pacheco sees the minutes as more “hawkish” (aggressive), even though the market has reacted positively.
See the full interview with Guide’s economist.
Inflation
The economist and partner at Valor Investimentos, Davi Lelis, comments that the Fed has made it clear that the next steps depend on inflation, which is rising globally.
In any case, according to him, the minutes left open the magnitude of the next increases in the interest rate in the United States.
Outside, the Dollar Index also exhibited volatility. Pressured at the opening of the trading session, the index that compares the US currency with six other strong currencies, went from high to slightly lower after the minutes. But it went up again.
local elections
It’s not just the Fed minutes and the outside that have fueled local caution.
With the start of election campaignLelis and other analysts reinforce that volatility, both up and down, should remain in the coming weeks with the elections.
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Source: Moneytimes
I am an author at Global happenings and I mostly cover automobile news. In my time working in the automotive industry, I have developed a keen interest in the latest developments and trends. My writing skills have also allowed me to share my knowledge with others through articles and blog posts.
