The U.S. dollar strengthened against the Brazilian real on Wednesday after data showed U.S. inflation remained elevated, reinforcing expectations for tighter Federal Reserve policy. The spot dollar closed 0.23% higher at R$5.1533, trimming its year-to-date decline to 6.12%.
The greenback’s intraday range widened to R$5.1394 at 9:06 AM before surging to R$5.1673 by 12:52 PM, following the release of U.S. economic data. The U.S. Dollar Index climbed 0.24% to 99.148, while the September dollar futures contract on B3 rose 0.06% to R$5.1570.
U.S. inflation figures released by the Commerce Department showed the core Personal Consumption Expenditures price index rose 0.2% in July, matching market forecasts. However, the headline PCE index increased 0.2% from June and 3.7% from a year earlier, matching the prior month’s pace but exceeding the 3.6% consensus estimate. The Federal Reserve’s preferred inflation gauge remains above the central bank’s 2% target, tempering expectations for imminent policy easing.
Second-quarter U.S. GDP growth was reported at 1.5%, in line with expectations, while Treasury yields rose on the data. The combination of firmer inflation and steady growth supported the dollar’s gains against emerging-market peers, including the Colombian peso and Chilean peso.
In Brazil, the consumer inflation preview (IPCA-15) for August fell 0.40% month-on-month after a 0.06% rise in July, outpacing the 0.30% decline forecast by economists polled by Reuters. Despite the headline deflation, underlying price pressures persisted in services and core inflation measures.
Brazil’s central bank intervened in the foreign exchange market, selling 60,000 swap contracts for rollover on September 1. The move followed a negative foreign exchange flow of $2.552 billion in August through the 21st, reflecting ongoing currency dynamics amid shifting global and domestic economic conditions.
