This Wednesday (November 5), market attention is focused on the announcement of the Selic, Brazil’s benchmark interest rate, which is expected to remain at 15% per year.
The Monetary Policy Committee (Copom) will release its decision at the end of the day, following a two-day meeting that began on Tuesday.
Analysts expect the Central Bank to adopt a cautious tone and reaffirm its pledge to lower inflation.
The latest data hinting, however faintly, at an economic cool down and a small dip in inflation expectations have somewhat reduced the risk in the minds of market participants, but they still largely believe this is not the time for the rate cut cycle to begin.
The decision comes at a critical time for the Brazilian economy, which has been juggling the effects of tighter monetary policy with constraints on growth and investment.
Financial markets are anticipated to closely watch the language of Copom’s announcement for signals regarding future monetary policy directions.
Domestic data on exchange flows and commodities
According to local media outlet InfoMoney, at 2:30 PM (Brazilian time), the weekly report on the movement of dollars in and out of the country will be available on the exchange rate schedule.
This report offers crucial insights into investor sentiment and capital movement, both of which impact the Brazilian currency’s performance.
That release will be accompanied by the October Commodities Index, which measures price movements for key export commodities including iron ore, oil and soybeans.
The performance of these commodities is pivotal to the Brazilian trade balance and fiscal revenue and thus is a key input for both market participants and policymakers.
However, the transparency provided by those factors, along with the interest rate path, currency flow data and commodities, will lend additional clarity to the short-term forces impacting Brazil’s external accounts and inflation outlook.
US indicators set the tone abroad
Investors outside of Brazil are prepared for a busy economic agenda that might have an impact on global markets.
In the United States, the day begins at 10:15 a.m. with the ADP employment report, a private-sector survey that monitors job creation and acts as an early indicator of the official payroll report.
The Payroll release has been halted due to the current US government shutdown, emphasising the relevance of ADP numbers in assessing labour market trends.
Shortly after, at 11:45 a.m., the composite and services PMI (Purchasing Managers’ Index) will be released, providing an updated reading on business activity and economic growth.
These indicators are expected to influence expectations for US growth and potential monetary policy adjustments by the Federal Reserve.
Supreme Court hearing on trade tariffs
In Washington, attention will also be focused on the United States Supreme Court, which is hearing arguments on tariffs imposed by former President Donald Trump.
The court is due to rule on the constitutionality of reciprocal duties levied on many nations, including Brazil, reigniting debate over American trade protectionism and its larger impact on global supply networks.
The hearing’s decision might have far-reaching consequences for international trade relations, especially as global manufacturing and logistics grapple with the aftermath of the pandemic and geopolitical turmoil.
Corporate earnings in focus
Wednesday is also focused on earnings, both domestic and abroad, as a main driver of sentiment in this market.
Other big companies that will publish third-quarter results today in Brazil are Eletrobras (ELET3), Engie Brasil (EGIE3), Minerva (BEEF3), Guararapes (GUAR3) and Petz (PETZ3).
Sectoral insights, covering everything from energy and agribusiness to retail and services, are also anticipated in these reports.
With investors digesting this balancing act of monetary policy, economic data, and corporate earnings, Wednesday may prove a crucial summit for markets across the globe.
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