The dollar lost strength after US data reinforced bets on a larger rate cut by the Fed (Image: Getty Images/ Canva Pro)
On the eve of 'Super Wednesday', o dollar spot (USDBRL) completed a sequence of five consecutive falls in expectations for interest rate decisions in Brazil and the United States.
In comparison with the real, the US currency ended trading at R$ 5,4882 (-0.41%) this Tuesday (17).
The performance differed from the trend seen abroad. The DXY indicator, which compares the dollar to a basket of six global currencies, closed up 0.22%.
What moved the dollar today?
On the domestic front, investors are awaiting the decision of the Monetary Policy Committee (Copom). The market expects an increase in the Selic rate tomorrow (18). So far, the consensus is for a 25 basis point increase, to 10.75% per year, but bets on a 50 basis point increase are not ruled out.
Abroad, monetary policy expectations also moved trading. In the United States, the Federal Open Market Committee (FOMC) of the Federal Reserve will also decide on interest rates this Wednesday (18).
There, the majority bet is on a 50 basis point cut in interest rates. The outlook was reinforced after new economic data that was stronger than expected.
Retail sales in the United States grew 0.1% in August on a monthly basis, above the expectation of analysts consulted by Reuters of a 0.2% drop.
Now, the traders see a 65% chance that the central bank will set interest rates in the range of 4.75% to 500% per year, according to the CME Group's FedWatch monitoring tool. Yesterday (16), the probability was 62%.
The probability of the Fed cutting 25 basis points, which would put US interest rates in the range of 5.00% to 5.25% per year, fell from 38% (yesterday) to 35% today.
It is worth remembering that the more the Fed cuts interest rates, the worse it is for the dollar, which becomes comparatively less attractive as Treasury yields fall, generating risk appetite in other markets with higher interest rates, such as Brazil.
*With information from Reuters