The dollar closed sharply lower on Tuesday, at R$ 5.07.

THE dollar The commercial exchange rate closed this Tuesday (14) with a sharp drop of 1.01%, quoted at R$ 5.0770. At its lowest point of the day, the exchange rate fell to R$ 5.0640; at its highest, it rose to R$ 5.1260. In this trading session, the market followed the release of US inflation data below market expectations, which reduced bets on a new interest rate hike by the Federal Reserve (Fed) at the meeting scheduled for July 29th. According to Department of Labor (DOL)the Consumer Price Index (CPI) Brazil recorded deflation of 0.4% in June, reversing the 0.5% increase observed in May and exceeding market expectations, which projected a 0.1% decline. Year-on-year inflation slowed from 4.2% to 3.5%, below the projected 3.8%. Meanwhile, CPI coreThe inflation rate, which excludes food and energy, showed deflation of 0.2% in the month—also lower than analysts' estimates—while the annual rate fell to 2.6%. The figures reinforced the perception that the process of slowing inflation continues in the US, reducing the need for further monetary tightening in the short term. According to the tool FedWatchof CME Group, the probability of maintaining the interest rate at the next meeting of Federal Reserve (Fed) The percentage jumped from 58.3% to 83.4%. Conversely, bets on a further increase fell from 41.7% to 16.6%. Despite the result, the president of FedKevin Warsh adopted a cautious tone during a hearing in the House of Representatives. According to the official, the June data represents only "a point of information" and should not be interpreted as a sign that the work to bring inflation back to the 2% target is complete. Internationally, oil prices rose again, although at a more moderate pace. After announcing on Monday (13) his intention to resume the naval blockade of Iran and charge a 20% tax on cargo transiting through the Strait of Hormuz, US President Donald Trump backed down from the proposal. In a post on the Truth Social network, Trump stated that he had abandoned the charge and would opt to expand trade and investment agreements with Gulf countries. "Based on highly productive conversations with Middle Eastern leaders, I have decided to replace the 20% rebate fee with trade and investment agreements," he wrote. In Brazil, without relevant economic indicators, the market followed the political scenario. A Futura Inteligência/Apex survey showed a technical tie in a possible second round of the presidential election, with President Luiz Inácio Lula da Silva registering 46.3% of voting intentions, against 46.1% for Senator Flávio Bolsonaro. Investors also remained attentive to negotiations between Brazil and the US regarding the possible application of additional 25% tariffs on Brazilian products. The decision by the US administration is expected this Wednesday (15).

This text was translated by machine from Brazilian Portuguese.