Dollar rises 4.3% in first week of 2021

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         Porto Alegre, January 12, 2021 –  The US currency closed Friday at BRL 5.4140 (+0.31%), reflecting the political deadlock in the United States and the fiscal concern in Brazil. Over the week, the US currency accumulated gains of 4.37%. The Democratic Party’s split over the bailout ended up cooling the so-called ‘blue wave,’ which takes away part of the market’s optimism, making the dollar gain value against its peers.

         The frustrating December payroll report in the US gave the warning sign. 140 thousand jobs were lost in December, with the unemployment rate remaining at 6.7%. The number of vacancies lost was above the market projection, which pointed to a decline of 93 thousand vacancies. Reflection of the second wave of the new coronavirus.

         The Fed, even indicating some optimism about the start of vaccination, remains largely cautious. In this sense, the perspective of almost zero interest rate and continuity of asset purchases by the monetary authority is maintained. It will take time for economic activity and employment to return to normal levels in the United States.

         The need for continuity of emergency aid here gains strength and can aggravate fiscal fragility, which collaborates with the dollar’s rally. This fiscal scenario associated with the lack of a definition of the immunization schedule increases uncertainty in markets. And it makes room for the dollar to gain value against the real.

         The advancement and unfolding of the second wave of COVID-19 around the world end up cooling the investors’ mood, very optimistic with the start of immunization. Of course, that supports the dollar against other currencies. The market is seeking short-term protection.

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