The dollar began to fall against the real this Monday, a day marked by divided attention between Sino-American tensions and decrees from the president of the United States, Donald Trump, to support the largest economy in the world in the face of the coronavirus crisis.
After opening slightly higher, at 10:24, the dollar fell 0.94%, to 5.3616 reais on sale, while the most liquid dollar futures contract fell 1.52%, to 5.3615 reais.
“Today, financial markets show mixed behavior, with investors on the one hand optimistic about the release of better than expected deflation numbers from China and Trump's 'stroke' in extending stimulus measures to his country, but, on the other hand, on the other, pessimistic about the growing tensions between this country and China”, wrote Ricardo Gomes da Silva Filho, from Correparti Corretora.
Donald Trump on Saturday signed a series of executive orders to offer additional economic relief to Americans hit by the pandemic, after his negotiators were unable to reach an agreement with Congress.
He said the measures would give an additional $400 a week to tens of millions of citizens left unemployed during a health crisis that has left more than 160,000 people dead in the country, less than the $600 previously approved.
Still, the initial news momentum for risky assets may be limited. “Despite the initial enthusiasm with Trump’s unilateral decision (…), investors began to question whether such executive orders would actually be valid due to legal issues”, warned Ricardo Filho.
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In China, producer price deflation eased in July amid rising global oil prices and as industrial activity moves toward pre-coronavirus levels, amplifying signs of recovery in the world's second-largest economy.
But the tense atmosphere between the Asian country and the United States has raised concerns among investors ahead of August 15, when the two sides will meet to review the implementation of Phase 1 of their trade deal and likely share mutual grievances over their relationship.
Abroad, risky currency pairs with the real had mixed behavior, with the Mexican peso and Australian dollar rising against the US currency, while the South African rand and Turkish lira fell.
Meanwhile, in the domestic context, “the dollar had been supporting the price in relative stability after a tumultuous season, since strictly speaking the country should not have an intensification of inflows and outflows of external resources throughout this year, and has a comfortable situation due to of the exchange reserves it has in stock”, said Sidnei Nehme, executive director of NGO Corretora, in a statement.
But, “if the pandemic shows greater longevity and the government is forced to extend assistance programs to the needy population, increasing the fiscal deficit, and there is a prospect that the resumption of economic activity may be slower, it is possible that the pressure will impose a level of the higher dollar price, as it encourages a defensive posture”, he added.
During the year, although it left behind stressed levels close to 6 reais, the dollar still accumulates gains of approximately 33% against the real amid the pandemic and an extremely low interest rate environment.
In the last session, on Friday, the dollar traded in the interbank market closed at a high of 1.30%, at 5.4126 reais on sale.
The Central Bank will hold a traditional swap auction in this session for up to 10 thousand contracts maturing in November 2020 and March 2021.
Source: agrolink
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