On sidelines, dollar is focused abroad amid caution about economic recovery


The dollar has been on sidelines, with external focus. The liquidity of central banks around the world and indications of a resumption of activity supported a negative adjustment. However, the fear of the acceleration of the contamination rhythm of COVID-19 in the United States, besides new cases in part of Asia, puts the prospects for an economic recovery in check, which helps keep the dollar on the rise, especially against emerging currencies. Thus, the U.S. currency closed Friday at 5.3230 (-0.26%), having accumulated a slight fall of 0.02% over the week.

In general, the market has changed its long-term confidence. The fact is that after the prompt recovery of activities, a very optimistic view of the rapid advance of the economy was created, which has been replaced by a more erratic return, subject to comings and goings until the emergence of the vaccine.

In Brazil, positive retail data in May are encouraging, although the recovery was expected after the fall in April. Moreover, the flow of capital shows signs of stabilization, despite the still negative result. The trade balance gave a positive result with agribusiness exports. There is also highlight on the manifesto of companies against deforestation and the way the country has dealt with the pandemic. Of course, all this picture affects long-term foreign investment.

Technically, the dollar tapers to the shortest averages, in a typical sideways movement. The market drivers are still the speed of the economy’s reopening and the evolution of the pandemic – and they have opposite effects on markets.