Dollar opens in decline

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The dollar opened this Monday, August 17th, with a slight decline, trading at R5.2098, down 0.18% near 9 a.m. The Ibovespa index, the primary indicator of the Brazilian stock market, began trading at 10:00 a.m. Among the day’s key developments is the release of Quaest’s latest electoral survey on Friday, August 14th. The poll again indicates President Lula (PT) in the lead, which has raised concerns regarding public finances. As the elections approach, investment decisions are expected to be increasingly influenced by candidates’ proposals on government spending and economic management. In the corporate sector, Casas Bahia filed for judicial recovery on Monday. This filing, encompassing the company and nine other group entities, aims to reorganize finances, renegotiate approximately R17.3 billion in debt, and ensure operational continuity. The move has prompted investors to scrutinize the Brazilian retail sector more closely.

Regarding monetary policy, the CME FedWatch Tool shows a decrease in the probability of a US interest rate hike in September, falling from 40% to 34.8%. Rabobank’s Jane Foley attributes this shift to recent US data releases, suggesting that speculation about Fed rate hikes has encountered a setback. This development could potentially lead to further depreciation of the US dollar, though it is not guaranteed. Foley also cautioned that downward pressure on the dollar could reverse if oil prices surge or if geopolitical tensions in the energy market bolster the currency. This cautious market sentiment coincides with foreign investors withdrawing funds from the Brazilian stock market, exerting downward pressure on asset prices. On the economic indicators front, investors are assessing new inflation data for Brazil and the Central Bank’s latest Focus Report. The IGPMI index registered a 0.51% decline this month, following a 1.13% decrease in July.

In international markets, tensions in the Middle East remain a significant focus. The SP 500 VIX, a measure of market volatility, climbed 5.33% to 15.080. Natural gas prices dropped by 1.54%, trading from an opening low of $2.6910 per MMBtu to $2.6380. The SP 500 VIX experienced a sharp increase at the opening of US markets, with intraday volatility exceeding historical averages due to elevated concerns in the equity market. Meanwhile, according to the Focus survey, market expectations for inflation, GDP, exchange rates, and the Selic interest rate for the current year remained unchanged. Global stock markets presented mixed performances: DOW 30: Closed down 148.90 points (0.28%) at 53,583.50. S&P 500: Closed up 2.25 points (0.03%) at 7,788.01. FTSE 100: Closed down 19.93 points (0.19%) at 10,730.20. DAX: Closed down 65.32 points (0.25%) at 26,375.00. NIKKEI 225: Closed up 506.45 points (0.74%) at 69,220.20. SHANGHAI COMPOUND: Closed up 55.48 points (1.41%) at 3,982.65. NSE NIFTY: Closed down 78.35 points (0.32%) at 24,287.70. Futures markets also showed varied movements: DOW 30 Futures: Settled down 180.00 points (0.33%) at 53,627.00. S&P 500 Futures: Closed up slightly by 0.01% at 7,805.75.

FTSE 100 Futures: Ended lower at 10,753.50 (down 28.50 points). DAX Futures: Fell 71.50 points. The US Dollar Index stood at 99.426, down 0.241. S&P 500 VIX Futures saw a significant surge. Commodity prices presented mixed trends. Gold prices advanced $6.20 to $4,443.50. Silver rose by 0.262 to finish at $65.370. Copper declined slightly to end around $6.5860. US crude oil (WTI) prices remained near $82.59, indicating a slight uptick. Brent Oil futures settled at $88.880, reflecting a rise attributed to geopolitical tensions. Natural gas prices fell by 1.54%, reaching approximately $2.69 per unit. In currency markets, the EURUSD pair traded slightly higher, and GBPUSD saw a marginal increase. The USDCAD moved lower. The AUDUSD pair gained value against the US dollar. USDCNY and other emerging market currencies showed modest movements.

Trump Threatens Airstrikes As Dollar Slides on Weak Index and Rising Oil Prices

The US Dollar Index is currently trading at 99.90 on the daily chart, maintaining a bearish tone below its 50-day Exponential Moving Average (EMA). The index is holding just above the 9-day EMA. The 14-day Relative Strength Index (RSI) is at 41.5, indicating subdued bullish momentum. The FXS Fed Sentiment Index hovers around 134.6, suggesting that broader expectations about the Fed are not yet translating into sustained dollar strength. Immediate resistance is found at the 50-day EMA of 100.27, with a stronger barrier at 101.80. Support levels are identified near the 9-day EMA at 99.96, followed by structural floors at 97.62, 96.49, and 95.56. Brent crude futures rose 0.59% to approximately $89.04 per barrel, while West Texas Intermediate (WTI) increased by 0.23% to trade at $82.59 per barrel. Amidst geopolitical tensions, U.S. President Donald Trump threatened airstrikes on Oman if it interfered with the Strait of Hormuz. This follows Iran’s announcement of a $30,000 reward for the capture or killing of American military personnel. These developments contributed to the recent rise in international crude oil prices. Information is sourced from G1.

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