Dollar rises amid tensions abroad, but ends the week down 0.30%

The dollar closed trading this Friday (20) at R$5.5249, equivalent to a 0.44% appreciation. The US currency strengthened abroad against emerging currencies and currencies from commodity-exporting countries, especially the Mexican peso. Even with the exchange rate rising slightly over the last three days, the dollar ended the week with losses of 0.30%, which leads to an accumulated depreciation of 3.40% in June compared to the real.

Traders did not identify a specific trigger for the dollar’s ​​rise on Friday, but cited adjustments after the real’s recent rally and a more defensive stance by investors ahead of the weekend. There are fears of an escalation in the conflict between Iran and Israel, which traded accusations at a meeting with the UN Security Council.

Back from the holiday in Brazil (Corpus Christi) and in the United States (Juneteenth), liquidity was significantly reduced, which left the formation of the exchange rate more subject to specific operations. The main barometer of the appetite for business, the dollar futures contract for July, had a movement well below the average for Fridays.

"We are seeing a small upward adjustment in the dollar, with increased risk aversion due to geopolitical issues," says Cristiane Quartaroli, chief economist at Ouribank. Copom's promise to keep the Selic rate high for a prolonged period encourages carry trade operations and makes carrying dollar positions more expensive.

"Copom stressed that it will not hesitate to resume the upward cycle if the scenario deteriorates. In this environment, the real performed better this week than the average of its peers," says Armor Capital's chief economist, Andrea Damico.

Dollar has mixed performance and falls against the Euro abroad

The dollar once again had a mixed performance against its main peers this Friday, the 20th, which led the DXY index - which measures the performance of the dollar against a basket of six strong currencies - to decline again in a session squeezed between the holiday this Thursday, the 19th, in the United States and the weekend.

While the US currency rose against most emerging currencies and commodity exporters, it fell against the euro, causing the DXY index to close down 0.20% at 98,700 points. For the week, the Dollar Index rose almost 0.70%.

At around 4:50 p.m. (Brasília time), the dollar rose to 146.12 yen, the euro appreciated to US$ 1.1525 and the pound fell to US$ 1.3456. The session took place amid negotiations to cool the conflict between Israel and Iran. Comments by Federal Reserve (Fed) director Christopher Waller also put pressure on the dollar. The director argued that the monetary authority should consider cutting interest rates at its next meeting.

The dollar has room to weaken moderately further as U.S. political uncertainty remains a burden, HSBC’s Paul Mackel said in a note. “We are skeptical that the situation will be calmer going forward as many trade discussions are ongoing and agreements are thin on details.”

With Estadão Content