Stock exchange turns and operates up nearly 1%; dollar approaches stability – 10/29/2020

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The commercial dollar operates almost stable after spending most of this Thursday (29) high. Around 3 pm, the US currency was up 0.03%, selling at R $ 5.765. The Ibovespa, the main index of the Brazilian Stock Exchange, dropped more than 1%, but recovered and rose 0.89%, to 96,217.84 points.

Markets started the day unstable with the confirmation of the second wave of covid-19 in Europe and the fear that new measures of social isolation could harm economic activity, as it happened in the first quarter. But the United States presented better-than-expected data for GDP in the first quarter and for claims for unemployment insurance, which injected cheer among investors.

Yesterday (28) the dollar rose 1.43%, closing at R $ 5.763 in the sale. The Ibovespa closed down 4.25%, at 95,368.76 points, in the worst daily drop in six months.

The dollar value released daily by the press, including the Twitter, refers to the commercial dollar. For those who are going to travel and need to buy currency at foreign exchange brokers, the value is much higher.

New wave of covid-19

In the view of strategist Dan Kawa, from TAG Investimentos, the explosion of coronavirus cases in Europe in the last days ended up leading several countries to adopt more aggressive measures of social distance and wider economic closure, generating greater instability.

“We expect a short-term of greater volatility and uncertainty. For a few moments, we may have the feeling that we are going back in time and we will be able to live a new ‘March 2020’,” he said. “We are still far from normal and from a clear, more vigorous recovery in all regions of the world.”

US GDP and unemployment better than expected

There was some relief in the dollar’s movement after news that the United States Gross Domestic Product shot up 33.1% in the third quarter, a result above the 31% gain forecast in Reuters research. This was the strongest pace since the government started recording in 1947, and followed by a record 31.4% contraction in the second quarter.

In addition, separate data on Thursday showed that 751,000 Americans filed for new unemployment benefits last week. Despite continuing at a high level and signaling difficulties for the US labor market, the reading came below the Reuters forecast of 775 requests.

Right after the release of the data, the dollar was at the lowest of the session, at R $ 5.758.

However, the scenario of the strong spread of Covid-19 in large economies – with some of the major European countries on the way to imposing new economically damaging restrictions – remained on the radar of investors, who were already operating with their nerves on edge in a few days. of the US presidential elections.

American elections

The proximity of the date of the fierce dispute between the current president, Donald Trump, and his Democratic opponent, Joe Biden, represents yet another obstacle to the negotiations for new fiscal stimuli in the largest economy in the world, which are likely to be implemented only after the Americans go to the polls.

“One of the factors for the dollar’s rise is the second wave of coronavirus in Europe, which affects not only the dollar market, but the general market as well as the economy of several countries,” Mauriciano Cavalcante, exchange director, told Reuters of Ourominas. “We also have the issue of stimulating the US government, which has a lack of agreement in Congress,” which raises the search for security and dries out the supply of dollars in the market, he added.

Interest and public spending in Brazil

In Brazil, investors would digest the news that the Central Bank on Wednesday kept the Selic at a historic low of 2% per year, in line with broad market expectations, leaving the door open for any possible cut in basic interest rates ahead.

Part of the market agents expected a hardening of the BC’s stance after the escalation of fiscal fears since the last meeting of the Monetary Policy Committee, on September 16 and 17. The BC, however, made no more specific mention of the topic.

Among the main fiscal risks projected by the markets, what has dominated investors’ concerns is the possibility that the government will break the spending ceiling to finance its new economic aid project, called Citizen Income.

The dollar is up almost 44% against the real in 2020.

Central Bank intervention in the exchange rate

The Central Bank announced at the beginning of this session the traditional swap auction to roll up to 12 thousand contracts maturing in April and August 2021.

This content was generated by UOL’s automated news production system and reviewed by the newsroom before being published.

* With information from Reuters

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