The dollar is experiencing an upswing, while the Ibovespa, the major stock index on the Brazilian stock market, is also showing signs of improvement. The main factor contributing to this positive performance is the concern surrounding interest rates in the United States.
Just a little over a month ago, the Brazilian stock market suffered a significant blow as the major stock index reached its lowest level ever, dropping to 128,524 points. This decrease of 0.60% from the previous trading session had a significant impact. However, the North American currency managed to gain some ground with a 0.09% increase.
In the midst of uncertainty surrounding interest rates in the United States, the dollar has reversed its signal and is currently performing higher than before. This change was observed on Thursday (18) during a trading session marked by the anticipation of a speech by a Federal Reserve (Fed) director. The economic agenda for the day is relatively weak both in Brazil and internationally.
Investors are closely analyzing the weekly statistics on unemployment insurance in the United States, which indicate that the labor market in the world's biggest economy is showing signs of strength. This positive information has influenced the market dynamics.
In Brazil, the B3 market's major stock index, Ibovespa, is currently experiencing a slight decline. The index dropped by 0.03% and reached 128,483 points. The previous day had witnessed a larger decline of 0.60%, causing the index to drop to 128,524 points, its lowest level in nearly a month.
Despite these recent declines, it is worth noting the overall improvements in the dollar and Ibovespa. The dollar has gained 0.09% in value, while the Ibovespa has experienced a drop of only 0.03%. On a weekly basis, the dollar has seen a significant improvement of 1.50%, and both the monthly and annual improvements stand at 1.59%.
Looking at the future of the market shifts, it is clear that global markets remain relatively stable as investors eagerly await fresh figures and speeches. The focus is currently on the Federal Reserve, with its officials being closely listened to by everyone in the United States. Today, there is particular anticipation for a speech by Raphael Bostic, president of the Atlanta Fed.
International leaders have recently taken a cautious approach when discussing the possibility of lowering interest rates in the United States, which is the world's biggest economy. No action will be taken to lower the benchmark interest rate until Christopher Waller, the Fed's chairman, states that low inflation will be maintained.
Waller has highlighted the need for a "methodical and careful" approach to any rate cuts, rather than rushing the decision. These remarks are contrary to market expectations, as investors have been betting on the North American central bank to begin cutting lending charges in March and possibly reduce rates by 1.5 percentage points by the end of the year.
However, these expectations are now starting to shift. According to CME Group's FedWatch tool, 61% of investors believe that the Federal Reserve will begin reducing interest rates in March. By the end of 2023, this figure has risen to 80%.
It is important to note that the Federal Reserve has maintained a base rate between 5.25% and 5.5% since July. This stability has created a sense of predictability in the market, but with the changing expectations surrounding interest rates, it remains to be seen how the market will react in the coming months.
Overall, the dollar's performance and the Ibovespa's resilience in the face of recent challenges indicate that the market is cautiously optimistic about the future. The focus now lies on the United States and its interest rate trajectory, which will have a significant impact on global financial markets.