Exchange rate: Dollar closes above R$4.95 after robust employment data in the US

Exchange rate: Dollar closes above R$4.95 after robust employment data in the US
Exchange rate: Dollar closes above R$4.95 after robust employment data in the US
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The spot dollar registered an increase of more than 1% in the domestic foreign exchange market, closing above R$4.95, in line with the global strengthening of the dollar. The release of US employment data in January exceeded expectations, influencing bets on the start of the cycle of interest cuts by the Federal Reserve (Fed), the American Central Bank.

At the beginning of negotiations, the dollar initially maintained the downward trend of the previous day, reaching a low of R$4.9083. However, with the release of the January employment (payroll) report, the US currency began to rise, quickly surpassing the R$4.95 mark. The maximum, reached in the early afternoon, was R$4.9763, driven by the increase in Treasury rates.

At the end of the day, the dollar appreciated by 1.07%, quoted at R$4.9683, the highest closing since January 22nd (R$4.9873), resulting in a weekly increase of 1.17%.

Expert analysis

Eduardo Velho, chief economist at JF Trust, highlights the strength of the payroll result, indicating that the Fed acted prudently by adopting more cautious communication. He notes that market expectations for interest rate cuts in 2024 were between 150 and 175 basis points, but the slowdown in inflation is expected to occur more gradually. Velho also highlights the resilience of the American economy, evidenced by the balance sheets of US companies, while emerging markets and currencies suffer from the rise in Treasuries.

Basic Rate in the United States

On Wednesday (31), the Federal Reserve announced the maintenance of the base rate in the range between 5.25% and 5.50%. The American Central Bank emphasized that it would not be appropriate to reduce the base rate until there is greater confidence in inflation sustaining towards the 2% target. Fed President Jerome Powell, in a press conference, practically ruled out the possibility of reducing interest rates in March, shifting expectations to May. After positive data on payroll and consumer confidence, the chances of a reduction in May decreased from 93.8% to 71.2%, with marginal bets in June.

Payroll

The US Department of Labor announced the creation of 353,000 jobs in January, exceeding analysts’ estimates. The unemployment rate was 3.7%, a positive surprise, while wages showed monthly and annual growth above forecasts. The combination of these factors contributed to greater rigidity in inflation, impacting global markets.

The article is in Portuguese

Tags: Exchange rate Dollar closes R4 .95 robust employment data

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