Dollar starts in May in a rush against real

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The dollar started the month of May in a run against the real, reaching more than 5.61 reais on Monday, amid fears about a return to the trade war between the United States and China and internal political tensions.

US President Donald Trump said last week that his arduous trade deal with China is now of secondary importance in the face of the coronavirus pandemic, and has threatened new tariffs on Beijing as his government works out retaliation measures in the face of the crisis of Cheers.

In another tense development in the rhetoric between the two largest economies in the world, US Secretary of State Mike Pompeo said on Sunday that there is "a significant amount of evidence" that the coronavirus appeared in a Chinese laboratory.

"The intensification of these tensions (between the USA and China) occurs in a scenario in which concerns regarding the global GDP prevail", said Bradesco in a daily bulletin. "Thus, the dollar strengthens, while stock markets operate in a downturn and oil futures contracts fall back again."

At 10:21, the dollar advanced 2.98%, to 5.5998 reais on sale. At the high of the day, reached right after the opening, the dollar touched 5.6152 reais on the sale, up 3.25%.

At B3, the main dollar futures contract was up 2.02%, to 5.6065 reais.

Meanwhile, the domestic political environment remains unfavorable for local assets, Luciano Rostagno, chief strategist at Mizuho bank, told Reuters.

“Bolsonaro continues to support demonstrations against the Supreme Federal Court and Congress, further stressing the relations between the powers. This can add to the downward pressure on the real. ”

On Sunday, after making an appearance of almost an hour on the ramp of the Planalto Palace for hundreds of people who were demonstrating in favor of his government and against the STF and the Mayor, President Jair Bolsonaro said that the Constitution will be fulfilled in the country “At any price” and that the government has the people and the armed forces at its side.

The statements came after Supreme Court Minister Alexandre de Moraes suspended the appointment of Alexandre Ramagem to the post of director general of the Federal Police, in a preliminary decision, citing possible compromise of the nominee, who has a friendly relationship with the Bolsonaro family .

This Monday, the president appointed Rolando Alexandre de Souza, Ramage's right-hand man, to the position.

According to a survey by Rostagno, "77% of the variation in the fall in the real (in April) came from domestic factors". "It shows how much this turbulent political environment is affecting the Brazilian currency."

The dollar traded on the interbank market closed the last session of April, on Thursday, with a jump of 1.55%, to 5.4380 reais in the sale, ending the month up by 4.69%.

In 2020, amid a scenario of low interest rates and global economic uncertainties, the dollar has already accumulated an increase of almost 40% against the real.

This Monday, the Central Bank will auction up to 10,000 traditional currency swap contracts with maturity in September 2020 and January 2021 for rollover.

Source: Agrolink