Itaú BBA - Dollar weakens globally on U.S. labor market figures

FX and Capital Markets

< Back

Dollar weakens globally on U.S. labor market figures

June 6, 2016

Weaker figures on the U.S. labor market damped expectations of an earlier interest rate hike by the Fed.

(full report attached)

International markets favored emerging market currencies

Weaker figures on the U.S. labor market damped expectations of an earlier interest rate hike by the Federal Reserve. The Brazilian currency appreciated 2.4% and closed the week at 3.53 reais per U.S. dollar, in line with its peers (Charts 1, 2, 3 and 4).

Central bank eases interventions in the FX market

The monetary authority did not offer reverse swap contracts last week. In May, the central bank reduced its short position in swaps by $6.9 billion (Charts 5 and 6).

Currency outflows in May 

The currency flow remained negative during the month, notwithstanding hefty trade inflows. In May, there were $11.4 billion financial outflows and $7.3 billion trade inflows (Charts 7 and 8).

No new issuance overseas last week  

There were no debt offerings by Brazilian companies abroad last week. Total issuances overseas stand at $9.5 billion in 2016, vs. $8 billion in 2015 (Chart 9 and table).

Negative foreign flows to the stock market in May

Foreign flows to the stock market were negative in May, driven by $508 million outflows from the spot market and $219 million outflows from the futures market. The balance remains negative in early June, with $47 million outflows from the spot market and $58 million outflows from the futures market (Chart 10).

Institutional investors altered their FX derivatives positions

Institutional investors reduced their positions in dollar futures by $800 million and their positions in cupom cambial by $2.2 billion. Non-residents, banks and institutional investors hold positions of $22 billion, $38 billion and $15 billion, respectively (Charts 11, 12, 13 and 14).


 

 



< Back