The U.S. dollar experienced fluctuations against the Brazilian real as disappointing U.S. labor market data impacted its performance. The USDBRL index closed at R$ 5.5711, marking a 1.22% decrease, while the DXY index ended down by 0.24%.
Internally, Brazil reported a primary deficit of R$ 9.283 billion for July, showing improvement from the previous year. The country’s trade balance in August revealed a surplus of US$4.828 billion, lower than expected.
On a global scale, expectations of a U.S. interest rate cut influenced the dollar’s trajectory, leading to decreased appeal. New U.S. employment data indicated a smaller job increase than anticipated, further fueling expectations of a rate reduction by the Federal Reserve.
Summary of U.S. Employment Data and Fed Rate Cut Expectations
The private sector added 99,000 jobs in August, below market expectations, while unemployment claims fell slightly. Market traders predict a 55% chance of a 25 basis points rate cut by the Fed. Expectations for a larger rate cut also increased.
This potential rate cut impacts the dollar’s attractiveness and could drive investors towards riskier assets in countries with higher interest rates like Brazil.