Dollar closes higher, pressured by the electoral scenario and oil; Ibovespa falls

The dollar closed sharply higher this Wednesday (23), pressured by the appreciation of the US currency abroad, the electoral scenario in Brazil and the rise in oil prices. The currency rose more than 1%, approaching R$5.17. The stock market fell almost 1%, returning to below 186 thousand points.

In New York, the main indices also ended the day lower, given the rise in interest rates on Treasuries (American public bonds) and tensions in the Middle East. Oil rose almost 3%, returning to US$100.

Main numbers

Commercial dollar: R$5.169 (+1.27%);

Ibovespa: 185,814 points (-0.86%);

Brent oil: US$98.12 (+2.84%);

WTI oil: US$ 92.16 (+1.81%).

Dollar on the rise

The spot commercial dollar gained strength throughout the session and reached R$5.177 at the day's high, around 2:40 pm. The currency began trading on a high, following the appreciation of the dollar abroad. In the final hours of trading it slowed down, until closing at R$5.169, with a gain of 1.27%.

In the international market, the DXY index, which measures the performance of the American currency against a basket of six currencies, rose around 0.54%, to 101,090 points, close to the highest levels since July.

Activity data from the United States contributed to the movement. The purchasing managers index (PMI) rose to 58.4 in September, compared to 56 in August. Readings above 50 indicate expanding activity.

The data reinforced expectations of high interest rates in the United States for longer. As a result, yields on US Treasury bonds rose, increasing the attractiveness of dollar-denominated assets. In Brazil, the market also reacted to new electoral polls.

During the year, the dollar still accumulates a drop of 5.83% against the real.

Brazilian stock market

After two sessions of increases, the Ibovespa closed down 0.86%, at 185,814 points. The index fluctuated between a maximum of 188,772 points and a minimum of 185,676 points. The financial volume totaled R$29.68 billion.

The external environment was the main factor putting pressure on risk assets, with the rise in Treasuries, strong economic data from the United States and the rise in oil prices. The electoral survey also remained on investors' radar.

Despite the drop on the day, the Ibovespa accumulated an increase of 4.73% in September.

New York

On Wall Street, the movement was also negative. The Dow Jones (industrial companies index) fell 0.68%, to 51,512.42 points. The S&P 500 (of the 500 largest companies) fell 0.75%, to 7,706.39 points. The Nasdaq (of technology companies) fell 1.13%, to 26,936.04 points.

The rise in US bond yields weighed mainly on technology stocks, which are more sensitive to interest rate expectations. The yield on ten-year bonds exceeded 5% per year for the first time since July 2007. Higher rates in advanced economies encourage capital flight from emerging countries, such as Brazil.

The scenario was also influenced by tensions between the United States and Iran and the rise in oil prices, factors that increase concerns about global inflation.

Oil advances

Oil rose again after five consecutive sessions of decline, amid the lack of progress in negotiations between the United States and Iran.

The Brent barrel, an international reference, rose 2.84%, to US$ 98.12 per barrel. Texas-based WTI rose 1.81% to US$92.16.

The lack of progress in negotiations has lowered expectations for a short-term solution to the Middle East conflict. News about a possible restriction on diesel exports from the United States also contributed to the increase, although the White House denied the existence of a plan in this regard.

The US Department of Energy also reported that the country's oil stocks increased by 2.969 million barrels in the week, contrary to expectations of a drop of 500 thousand barrels.

* with information from Reuters