This Friday, the U.S. dollar achieved a significant uptick against the Brazilian real, recording its strongest weekly appreciation in six months.
Driven by US consumer inflation data, rise suggests tempered expectations for Fed monetary easing this semester.
The dollar rose by 0.60% to 5.1213 reais, though it had earlier surged over 1% to reach 5.1496 reais.
By the day’s close, it had settled at its highest position since October 9, 2023, when it stood at 5.1315 reais.
This week’s performance marks the third consecutive weekly gain for the dollar, totaling a 1.11% increase—its most substantial since January.
Recent data disclosed that the U.S. consumer price index (CPI) increased by 0.4% last month, mirroring the rise in February.
Over the past year through March, the CPI grew by 3.5%, slightly above the 3.4% annual increase forecasted by economists.
US PPI rises for March below expectations; market skepticism persists regarding imminent Fed rate cut this semester.
CME Group’s FedWatch tool shows market odds for June rate cut drop significantly to 25.8% from 53.2% last week.
Further comments from Federal Reserve officials underscored the sentiment.
Kansas City Fed President Jeff Schmid: With inflation above 2% target and strong job market, it’s not time for rate cuts.
Chicago and Boston Fed Presidents offer mixed outlook on rates, citing ongoing high inflation concerns.
The rising dollar benefits from higher U.S. market yields, making it more attractive to international investors.
Itaú’s Mario Mesquita: External factors may bolster dollar, delaying U.S. rate cuts, balanced by Brazil’s Selic rate.
Observers note dollar’s deviation from 200-day moving average near 4.93 reais, signaling robust trend and challenging outlook for real.