Third Consecutive Day of Dollar Decline Against Real

The U.S. dollar continued its downward trend against the Brazilian real, marking its third consecutive day of decline.

This trend aligns with falling Treasury yields globally, as investors respond to recent U.S. inflation data and GDP reports.

On Thursday, the spot dollar closed at 4.9228 reais, reflecting a 0.19% drop. Over three days, the currency has seen a 1.30% decline, contrasting with a 1.47% rise in January.

In the futures market, the foremost dollar contract on B3 fell 0.16% to 4.9290 reais by 17:26 Brasília time.

The U.S. Commerce Department reported an annualized 3.3% growth in last year’s final quarter GDP, exceeding the 2.0% increase expected by economists.

This robust growth, coupled with a slower rise in inflation, paints a positive picture for the U.S. economy.

The Personal Consumption Expenditures (PCE) index rose by just 1.7% in the fourth quarter, down from 2.6% in the third.

Moreover, the GDP deflator’s increase was only 1.5%, below the anticipated 2.3%. These figures suggest a more stable inflation environment in the U.S.

In response, Treasury yields remained low, influencing the dollar’s relative weakness against currencies like the real.

Fernando Bergallo, director of FB Capital, noted the comforting nature of the U.S. data, suggesting a ‘soft landing’ for the economy.

Brazilian Central Bank’s actions also played a role

Despite initially rising against major and emerging market currencies, the dollar’s spot market value fluctuated in response to robust U.S. GDP data and subsequent inflation figures.

The Brazilian Central Bank’s actions also played a role.

It sold all 16,000 traditional swap contracts offered for March rollover and announced a positive foreign exchange flow of 4.846 billion dollars in January.

Liquidity in the Brazilian foreign exchange market remained stable, with significant trading activity in the most liquid February dollar future.

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