Porto Alegre, June 8, 2021 – The much-lower-than-expected results of the US labor market in May ended up weighing on the US currency. The payroll indicated the creation of 559,000 new jobs in May, below the 663,000 expected by the market. The weak data rule out, at least momentarily, the possibility of withdrawal of stimulus to the economy by the Fed, which increased the demand for risk and weighed against the US currency. The ‘dollar index’ dropped again and approached 90 points. In Brazil, the US currency closed Friday at BRL 5.0360, the lowest level since December 2021. For the week, the dollar accumulated a 3.4% decline.
Brazil continues to benefit from the large global liquidity, the rising demand for risk, and the difference in rates due to low US interest rates. The entry of foreign flow, in carry-trade operations, knocked down the dollar. The result of the Brazilian GDP in the first quarter, above expectations, and the forecast of new external funding and IPOs also play against the dollar and in favor of the real.
Next week’s robust schedule may bring some turmoil to the forex market. Highlight on China’s trade balance and the ECB’s monetary policy decision. Also pay attention to inflation data on Brazil, United States and China. In Brazil, traders must keep an eye on news about reforms and emergency aid. The signs from the dollar are negative, given the external optimism, but as the US currency has already fallen too much, there is some room for slight corrections.
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