Dollar operates in decline with interest rate decisions in Brazil and the USA in focus; Ibovespa advances

Understand what makes the price of the dollar rise or fall
After starting this Wednesday's session (17) on a high, the dollar reversed its signal and began to fall. Around 11 am, the American currency fell 0.36%, to R$ 5.0677, while the Ibovespa, the main index on the Brazilian stock exchange, advanced 0.73%, to 170,884 points.
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▶ "Super Wednesday", the moment in which the central banks of Brazil and the USA are expected to announce their interest rate decisions, is the main highlight of the session. The market expects the US Federal Reserve to maintain the US base rate, amid signs of still high prices in the country. Here, the estimate is for a new cut of 0.25 percentage points (p.p.) by the Monetary Policy Committee (Copom).
The interest rate policy in the USA also has repercussions in Brazil. With rates at a high level, pressure is growing for Selic, the Brazilian basic interest rate, to remain at a high level for longer, in addition to generating effects on the exchange rate and the level of foreign investment in the country.
▶ The new peace agreement between the United States and Iran is also on the radar. The understanding would include, among other points, the reopening of the Strait of Hormuz and a new truce, including Lebanon. US President Donald Trump said the treaty also makes it "very clear" that Tehran will not have nuclear weapons, but reiterated that the understanding is not yet final. (understand more below)
See below more details of the day in the market.
Dollar

a
Accumulated for the week: +0.48%;
Accumulated for the month: +0.87%;
Accumulated for the year: -7.33%.
Ibovespa

Accumulated for the week: -0.42%;
Accumulated for the month: -1.82%;
Accumulated for the year: +5.89%.
Interest rates in the spotlight
The interest rate decisions of the central banks of Brazil and the United States are the main highlight of this Wednesday.
Around here, the expectation is that the Copom will make another reduction of 0.25 percentage points (p.p.) in basic rates, leading to Selic to 14.25% per year.
According to analysts at XP Investimentos, the inflation scenario has deteriorated since the last collegiate meeting, amid global supply shocks, the heating of domestic activity and the interruption of the appreciation cycle experienced by the real. p.p., to 14.25%, maintaining some flexibility for additional adjustments, but with cautious communication and less inclined to signal new steps", said XP analysts in a report.
In the United States, there is great expectation among investors for the decision of the Federal Open Market Committee (Fomc), which is holding, today, the first meeting of the management of Kevin Warsh, appointed by President Donald Trump to assume the presidency of the Fed.
Projections indicate further maintenance of American basic rates, keeping the country's interest rates at still high levels.
➡ The high interest rate scenario in the USA has different effects on the world - including in Brazil. This is because, with higher interest rates, foreign investors tend to reallocate resources to the largest economy in the world, in search of higher yields and greater security.
➡ As a result, the dollar tends to appreciate in relation to the currencies of other economies in the world - including the real - and the Brazilian stock market tends to fall.
➡ When the dollar is higher, imported products become more expensive in Brazil, which can put pressure on domestic inflation, especially in items such as fuel and electronics. With higher prices here, the tendency is for this scenario to also result in higher interest rates in Brazil, making credit more expensive and limiting economic growth.
Peace agreement between the USA and Iran
The USA and Iran reached an agreement to end the war last Sunday (14). The memorandum of understanding was signed on Monday and the text is expected to be released after an in-person ceremony on Friday. (follow the main events)
The details of the agreement have not yet been fully disclosed. According to international media, the memorandum of understanding should provide for:
a new 60-day ceasefire on 'all fronts', including Lebanon;
the immediate reopening of the Strait of Hormuz - which, according to Trump, should be delayed until Friday, so that mines can be removed from the area;
Iran should also not charge fees to vessels, and local traffic should return to pre-war levels within 30 days;
for the US to also lift the blockade that they make at the entrance to Hormuz;
that sanctions on Iran be progressively relaxed;
that Iran commits itself not to obtain a nuclear weapon.
When asked about one of the points of the agreement, the end of economic sanctions against the Iranian regime, Trump said that it will not be immediate and that this will be debated by the two countries later.
What are the points still to be clarified in the agreement between the USA and Iran
The Republican also stated, this Wednesday, that despite the If two countries have reached an agreement, the negotiations are not yet over and they can attack Iran again if they are not satisfied.
"It's a memorandum of understanding. And if I don't like it, we'll go back to shooting at them, bombing their heads. If I don't like it, if they don't behave, we'll go back to bombing right in their heads, okay?" The United Kingdom, Canada, France, Germany, Italy and Japan.
In a statement, the leaders said: "We emphasize the need for negotiation... to address the threats posed by Iran in the region and beyond, and to ensure that they never obtain a nuclear weapon."
Global markets
Wall Street's main indices were trading slightly higher on Wednesday, with investors eyeing the first interest rate decision under the command of the new Federal Reserve (Fed) chairman, Kevin Warsh.
At the opening of the markets, the Dow Jones advanced 0.15%, to 52,070.81 points. The S&P 500 rose 0.11%, to 7,519.49 points, and the Nasdaq gained 0.35%, to 26,466.52 points.
In Europe, stock markets operated without a single direction this Wednesday. The pan-European index advanced 0.28%.
Among the main indices, the German DAX fell 0.31%, the French CAC 40 fell 0.15% and the British FTSE 100 had a slight drop of 0.04%.
In Asia, most shares closed higher this Wednesday, driven by the technology sector. The CSI300, which brings together the largest companies in Shanghai and Shenzen, advanced 0.97%, while the Shanghai index, the SSEC, gained 0.74%. The Hang Seng fell 0.74%.
In Japan, the Nikkei rose 0.7%, while the Kospi, from South Korea, rose 1.58%.
*With information from Reuters news agency.
Real and dollar banknotes
Amanda Perobelli/ Reuters

Source: G1