Last September the dollar ranged from a low of BRL 4.0280 to a high of BRL 4.1960. An amplitude of 4.17%. And twice over September the US currency unsuccessfully tested the level of BRL 4.20. Despite all this volatility, the dollar closed September with gains of only 0.31% compared to late August. This laterality guides the forex market in early October, but with a slightly downward bias.
Signs of weakening economy in the US, in the face of lower than expected numbers, reinforce the idea of new cuts in US interest rates and weigh against the dollar. Internally, the market also reflects the Pension Reform, with the government’s defeat with the Senate’s adjustment of salary bonus.
The basic scenario is of low interest rates and slowing activity worldwide. The balance of forces explains this caution, which keeps the dollar still steady and close to the highs. The directional movement of the exchange rate is still much more external than internal. And out there the feeling is of risk aversion and fear of global recession.
The Pension Reform is practically already priced by the market. Traders are awaiting new measures for more solid public accounts in the long term. Expectation of new cuts in the Selic rate. In this sense, Brazil is going the opposite direction in comparison with other global economies, but the bad external environment must interfere with its internal performance and explain the investors’ caution.