On Wednesday, the U.S. dollar showed a decline, contrasting its strong performance in recent sessions.
This made the Brazilian real the third-best performer out of the 33 most liquid currencies monitored.
Despite the dollar’s previous surge, the absence of a clear market driver indicates potential market adjustments.
This observation comes ahead of releasing the Consumer Price Index (CPI) in the U.S.
At 9:50 AM, the commercial dollar was down by 0.36% to R$ 4.8798, while the future contract for September decreased by 0.48% to R$ 4.8995.
After a significant appreciation of the dollar against the real in recent days, the U.S. currency’s momentum slightly softened.
In derivatives, foreign investors’ bets against the real decreased but hit a new peak.
According to B3 data, the combined position in mini dollar, future dollar, swap, and coupon reached US$51.8 billion, US$176 million higher than the previous day.
Concerns about China’s economic recovery seemed minimal, with little impact on commodity-linked currencies.
For instance, the Norwegian krone performed second-best in the session, only surpassed by the Hungarian forint.
The financial world’s attention is now on the ten-year T-note auction in the U.S.
Last week, the U.S. Treasury’s announcement on increasing bond auctions led to a spike in bond yields, particularly long-term ones.
Financial observers will closely watch the upcoming T-note auction for its size and paper demand, potentially influencing the dollar’s global performance.
In Brazil, morning retail sales data slightly exceeded expectations, reducing the likelihood of aggressive interest rate cuts by the Central Bank.
Options market data showed a 78% prediction for a 0.50 percentage point cut, with an 18% chance for a deeper cut.
A gradually narrowing interest rate difference may continue supporting the Brazilian currency’s attractiveness.
Later on Wednesday, foreign exchange investors are set to focus on foreign exchange flow figures, with the previous report showing a net outflow of US$913 million.