Dollar closes higher this Friday, but accumulates fall in July | Economy

The dollar closed higher this Friday (29), still evaluating the consequences for the global economy of the decline in US GDP and the decision of the US central bank in relation to interest rates.

The US currency rose 0.21%, sold at R$5.1743. See more quotes.

The previous day, the US currency retreated 1.66%, sold at R$5.1633 – the lowest closing level since June 21 (R$5.1547). With this Friday’s result, it accumulated a drop of 5.88% in the week and 1.12% in the month. In the year, it has a devaluation of 7.18%.

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What is messing with the markets?

On the external front, US consumer spending rose more than expected in June, when Americans paid more for goods and services, with monthly inflation recording the biggest jump since 2005.

Consumer spending, which accounts for more than two-thirds of US economic activity, rose 1.1% last month. The May data was revised up to show that spending rose 0.3% instead of the previously reported 0.2%.

Inflation, in turn, heated up in June. The personal consumption expenditures price index jumped 1.0% last month, the biggest jump since September 2005 and following a 0.6% gain in May. In the 12 months through June, the increase was 6.8%, the highest since January 1982.

These indicators are closely monitored by the Federal Reserve (US BC) to support monetary policy decisions.

The US Gross Domestic Product (GDP) dropped 0.9% in the second quarter. It was the second straight quarter of decline: in the first quarter, the country’s economy also had an annualized drop of 1.6%, in the first retraction since the recession at the beginning of the pandemic, two years ago. In Q4 2021, the US economy grew at a robust pace of 6.9%.

Markets also evaluated the Federal Reserve’s monetary policy decision. On Wednesday, the Fed raised the country’s interest rate again by 0.75 percentage point, to a range of 2.25% to 2.5%.

Higher interest rates in the United States tend to reinforce the flow of dollars to that country, causing the currency’s quotation to rise against the real. The assessment, however, is that the rise was in line with expectations – investors feared that the rate could be raised by 1 percentage point.

On the local scene, the unemployment rate in the country dropped from 9.8% in May to 9.3% in June. It is the lowest level for a second quarter since 2015. For the end of 2022, the median of 26 projections collected by Valor Data among economists from consulting and financial institutions points to an unemployment rate of 9.7%.

Fears about the credibility of Brazil remain on investors’ radar, which was recently shaken by a constitutional amendment that expands and creates a series of social benefits, providing for out-of-ceiling expenditures just a few months away from the presidential elections.

About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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