The dollar closed up 0.49%, at R$5.128 this Friday (4), with investors reflecting data from the US labor market, known as payroll, stronger than expected, in addition to the Brazilian electoral scenario.
Figures from the United States pointed to still heated activity, reducing expectations of interest rate cuts by the Fed (Federal Reserve, US central bank). The prospect of higher interest rates in the United States tends to put pressure on investments in emerging markets and increase the value of the currency.
The Brazilian Stock Exchange, impacted by the greater search for assets considered safe, fell 0.02%, to 185,147 points, close to stability. In the week, the index increased 5.4%, the second biggest increase of the year.
Despite Friday's advance, the dollar fell 1.30% in the week. During the year, the Stock Exchange accumulated an increase of 14.9%, while the currency recorded a drop of 6.5%.
During the week, domestic assets benefited from greater optimism among analysts with the possibility of an alternation of power in this year's presidential elections. Research revealed greater proximity between Lula (PT) and Flávio Bolsonaro (PL).
Furthermore, the intensification of conflicts in the Middle East favored the return of the flow of foreign investors to the Brazilian Stock Exchange, with emphasis on the commodities sector, contributing to the appreciation of the real and the Ibovespa.
The focus of this Friday's trading session was abroad. The US economy added 162,000 non-agricultural jobs in August, the US Bureau of Labor Statistics reported in its payroll report. The unemployment rate remained at 4.1%, indicating a still resilient job market.
Economists consulted by Reuters expected 55,000 jobs to be opened in the month. Estimates ranged from a loss of 25,000 jobs to a gain of 121,000 jobs — in other words, the result was above the ceiling projected by analysts.
"With the job market showing resilience, the need for the Fed to stimulate the economy on the employment side decreases and increases the space to keep interest rates high for longer, especially while inflation still requires caution", says Leonardo Mendes, financial consultant at Manchester Investimentos.
The Fed will set the next interest rate at a meeting scheduled for September 15th and 16th. Today, US interest rates are in the range between 3.5% and 3.75%.
On Thursday, Fed director Christopher Waller stated that he could defend maintaining interest rates this month if American inflation shows signs of retreat. The next inflation indicator to be released is the Consumer Price Index (CPI) for August, on September 11th.
The Fed prefers the Price Index for Personal Consumption Expenditures (PCE) as a measure of inflation, but the indicator will only be released on September 30.
Waller's signal contrasts with that of Fed President Kevin Warsh, who stated last week, in Jackson Hole, that the central bank will have work to do if American inflation does not return to the 2% target.
A more restrictive stance by the Fed tends to boost the dollar and Treasuries, US Treasury bonds, and put pressure on emerging market assets — such as the real and the stock exchange.
"For Brazil, the main channel is the interest rate differential. Higher American rates keep dollar assets more attractive and reduce the advantage of Brazilian interest rates", says Leonardo Mendes.
During the trading session, the electoral scenario was also on the radar.
The Datafolha survey released on Thursday (3) night showed President Lula (PT) with 38% of voting intentions in the first round, compared to 33% for Flávio Bolsonaro (PL). In the second round, the president numerically surpasses his predecessor Jair Bolsonaro's son by 46% to 44%, a technical tie due to the survey's margin of error, plus or minus two points.
In the previous survey, two weeks ago, the PT member had 39% and the PL senator 33% in the first round simulation. In the second round scenario two weeks ago, Lula had 47%, compared to Flávio's 43%.
The result added to other surveys that showed a narrowing of the difference between the leaders in the dispute.
"Investors have reacted positively to the perception that Flávio Bolsonaro would be regaining competitiveness and increasing his chances in the electoral dispute. This movement has favored the performance of the Brazilian currency and exerted downward pressure on the exchange rate", says Leonel Oliveira Matos, market intelligence analyst at StoneX.
Analysts estimate that Flávio Bolsonaro has a profile more aligned with fiscal discipline than the current president.
Last week, in an interview with Jornal Nacional, the PL candidate stated that, if elected, he will make an adjustment to the public debt without changing Social Security or the policy of increasing the minimum wage. In the same program, Lula stated that he was not worried about Brazil's public debt, but said that fiscal responsibility "marks" his life.
There was also an impact from the STF (Supreme Federal Court) crisis. Messages recovered by the Federal Police on the cell phone of Daniel Vorcaro, from Banco Master, were released last Tuesday (1st) and indicated the actions of Minister Alexandre de Moraes in favor of the former banker.
The removal of confidentiality from the investigation, by decision of Minister André Mendonça, indicates that, days before being arrested by the PF, Vorcaro asked Moraes if he should leave the country.
On Thursday, Moraes asked that Mendonça be investigated for abuse of authority, administrative improbity and criminal liability in the conduct of cases involving Banco Master and the INSS (National Social Security Institute).
"Although this episode is not directly related to the Executive, the predominant interpretation in the market is that the erosion of the STF may be more favorable to Flávio Bolsonaro's campaign than to Lula's, since Flávio has historically been quite critical of the Supreme Court", says Leonel.
