Dollar rises with focus on US data and Powell’s speeches amid geopolitical tensions By Reuters

By Luana Maria Benedito

SÃO PAULO (Reuters) -The currency advanced against the real this Wednesday, with investors reacting to employment data and awaiting readings on activity in the United States, as well as speeches by Federal Reserve chair Jerome Powell, with geopolitical tensions deepening the nervousness about the prospects of monetary easing in the world’s largest economy.

At 10:30 am (Brasília time), the dollar in cash rose 0.36%, to 5.0769 reais on sale, approaching the highest intraday levels since October last year.

At B3 (BVMF:), the first maturity contract rose 0.16%, to 5.0905 reais.

Supporting the dollar globally, data this morning showed that job openings in the US private sector exceeded expectations in March, pointing to continued strength in the labor market and giving the Federal Reserve more reason to be cautious in setting the start of its monetary easing.

184,000 jobs were opened in the private sector last month, after 155,000 in February in revised figures, according to an ADP report. Economists consulted by Reuters predicted the creation of 148,000 jobs last month.

The ADP data, developed in conjunction with Stanford’s Digital Economy Lab, was published ahead of Friday’s release of the Labor Department’s most comprehensive jobs report for March.

Additionally, keeping investors cautious, US services sector activity data will be published later on Wednesday.

The day before, the spot dollar closed the day at 5.0589 reais on sale, stable, but still at the highest closing value since October 13th of last year after having accumulated an increase of 1.57% in the previous two days.

“Maybe people are looking at the internal side here, our fiscal issue, but what is really weighing is the scenario abroad: the issue of American interest rates and, now, this dose of the geopolitical issue”, said Hideaki Iha, operator at Fair Broker, about the recent dollar rally.

Recently, traders have reduced bets on a start in June of the Fed’s monetary easing, as well as projections of total easing to be promoted by the central bank this year.

“What is holding the Fed back from cutting interest rates? It’s inflation, so, with that, this rise worsens the scenario,” said Iha.

Oil prices extended their gains this Wednesday, approaching 90 dollars per barrel, amid supply risks arising from Ukrainian attacks on Russian refineries and the potential for an escalation of the conflict in the Middle East.

In addition to benefiting from the effects of rising oil prices on global inflation — something that tends to favor the scenario of a stricter Fed –, the dollar tends to be boosted by geopolitical tension itself, as investors fill their portfolios with safe assets to prevent possible escalations in conflicts.

Iha told Reuters he does not expect new interventions from the Central Bank in the foreign exchange market, although he continues to monitor the authority’s movements. The day before, the BC held an extra auction of 20,000 traditional currency swap contracts, the effect of which is equivalent to the sale of dollars on the futures market.

The BC said that the operation aimed to meet the demand generated by the redemption of the NTN-A3 bond, linked to the exchange rate, scheduled for April 15, but some professionals considered that the institution may have used the moment to contain a greater rise in the dollar. .

(By Luana Maria BeneditoEditing by Camila Moreira)