- Brazilian (BRL) is rising after yesterday’s losses
- Trump threatened 50% tariffs
- US dollar (USD) is rising against its major peers
- US jobless claims unexpectedly fall to a 7-week low
The US dollar Brazilian Real (USD/BRL) exchange rate fell, giving back some of yesterday’s gains. The pair rose 2.37% in the previous session, settling on Wednesday at 5.5766. Today the pair trades -0.77% at 5.5336 and traded between 5.5295 and 5.6165.
The Brazilian real rebounded on Thursday as investors reassessed the impact of U.S. President Trump’s latest trade tariff announcement.
On Wednesday, Trump threatened 50% tariffs on exports to the US north, also issuing tariff letters to seven other smaller trading partners.
Interestingly, Brazil imports more from the US than it exports to the country. However, Trump said the high tariff was partly due to the Brazilian government’s treatment of the former president, Bolsonaro, in a sign that Trump was intervening in the country’s domestic political situation.
The real fell as much as 2.5% on Wednesday before rebounding today,
The US Dollar is falling against the Real but is rising against its major peers. The US Dollar Index, which measures the greenback against a basket of major currencies, is rising 0.04% to 97.65, marking the fourth day of gains.
The U.S. dollar is rising on optimism surrounding the outlook for the U.S. economy, following the unexpected decline in jobless claims to a seven-week low, which suggests a more resilient U.S. labor market.
Data showed that the number of Americans filing for jobless benefits for the first time unexpectedly dropped by 5000 to 227,000. This was below the 235,000 that economists had expected.
The data comes after last week’s number from payrolls was also stronger than expected, suggesting that the US labour market is holding up despite the headwinds that it faces.
The minutes to the FOMC meeting showed that Federal Reserve officials broadly believe that the central bank will cut interest rates twice more this year. However, there was division among policymakers, with some seeing a chance of a July cut and others not seeing reason to cut rates at all this year.
