O dollar (USDBLR) posted strong losses against the real on Friday, ending the week in the red after better-than-expected US employment data sparked a global wave of risk appetite, while the Precatório PEC remained on the domestic radar.
The spot dollar ended the trading session down 1.53%, its biggest daily devaluation since September 9 this year (-1.80%). In the week, which was not traded on Tuesday due to the holiday, the currency fell 2.12%, the sharpest weekly loss since the period ended August 27 (-3.5%).
Meanwhile, in the B3 (B3SA3), where trading continued, the first-maturity dollar futures fell 1.50% to 5.5475 reais.
The good mood took over markets around the world on Friday, after data from the US Department of Labor showed that job creation USA increased more than expected in October, as infections with Covid-19 during the summer in the Northern Hemisphere decreased.
531,000 jobs were created outside the agricultural sector last month. Economists consulted by Reuters expected 450,000 jobs to be opened.
The data, received by investors as healthy but not high enough to pressure the Federal Reserve to tighten its monetary policy sooner than expected, global equities boosted the three major indices. Wall Street closed at record highs, according to preliminary data and emerging market currencies on the day, while the dollar index fully returned gains recorded at the beginning of trading.
In addition, yields on Treasuries, the US government bonds, were down, with the ten-year rate reaching its lowest level since Sept. 27, at 1.45%. Lower yields in the US tend to hurt the US currency.
Anderson Meneses, CEO of Alkin Research, wrote in a Twitter post that, “with supply chain constraints and a low participation rate, strong employment data could mean a stabilization of supply with less inflationary pressure” in the US.
The biggest economy The world has suffered from more intense pressure on prices due to bottlenecks in the supply chain and labor shortages.
Domestically, fiscal uncertainty remained on the radar, amid government plans to provide aid of 400 reais to the vulnerable population in 2022.
The plan for financing the benefits, called Brazil Aid, is the PEC dos Precatórios, which was approved in the first round by the Chamber of Deputies this week by a narrow margin.
The PEC that changes spending ceiling rules is not viewed favorably by the financial markets, as it is considered detrimental to the country’s fiscal credibility.
Even so, the proposal came to be seen as the best possible way out of the uncertainty that has gripped markets in recent weeks amid government pressure for more spending.
“If the PEC is passed, the prevailing view among most clients is that key risks would cool considerably and asset prices could be more in line with macroeconomic fundamentals,” wrote the Citi in this Friday’s report. This “would likely leave some of the fiscal issues in the past and could open a window of calm in the markets.”
This Friday, the secretary of Economic Policy of the Ministry of Economy, Adolfo Sachsida, said he had no doubts about the approval of the PEC dos Precatório.
The proposal must be voted on in the second round next week in the Chamber. If approved, it will go to the Senate.
Source From: Moneytimes
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