US Dollar Rises to R$ 5.1252 as Ibovespa Drops

The US dollar gained 0.47% to close at R$ 5.1252 on 11 September, reversing early morning declines. The Brazilian currency initially strengthened alongside dropping oil prices and lower US Treasury yields, but political caution reversed the move. Senior economist at Nomad Vitor Kayo stated that political news contributed to the dollar's rise, particularly after a judicial decision ordered an investigation into a presidential candidate.

The move coincided with fresh inflation data from both countries. In Brazil, the IPCA consumer price index fell 0.32% in August, marking its first deflation in a year. The retreat was driven by electricity bills, which dropped 7.63% due to the Itaipu bonus, alongside decreases in airfare (-13.17%), food, and fuel. Marcelo Bassani, economist and founding partner at Boa Brasil Capital, noted that the reading opens room for another rate cut at the next Copom meeting.

In the stock market, the Ibovespa dropped 0.56% to finish at 187,206 points following an acceleration in the US consumer price index. CME Group's FedWatch tracked an 86.5% chance that the Federal Reserve will lift interest rates into the 3.75% to 4% range on 15-16 September, versus a 13.5% probability of keeping rates at 3.5% to 3.75%. US equity benchmarks nonetheless climbed, with the Dow Jones rising 0.98%, the S&P 500 gaining 0.86%, and the Nasdaq advancing 0.96%.

Commodity markets also saw volatility amid conflict in the Middle East. Brent crude futures for April dropped 2.61% to trade at $104 per barrel after approaching $110 earlier in the session, pressured by talks of potential diplomatic meetings between Iran and Persian Gulf nations concerning the Strait of Hormuz.