At the end of the week, the agents also reflected the PMI forecasts from the major global economies since activity indicators have been observed with more attention in the last few months amidst the concern with the deceleration of countries' activities. Among the results, the highlight was the US services PMI, which retreated from 52.7 in June to 47.0 in July, taking the consolidated result (industry and services) to 47.5 points, below the 50 points that divides an expansion from contraction condition. Likewise, in the eurozone, the services sector dropped from 53 to 50.6 points in July, with manufacturing shrinking from 52.1 to 49.6. The results, indicating that some sectors may already be contracting this month, tend to raise fears about the possibility of a significant drop in the activity level before the acceleration in prices is brought under control, which could set up a scenario of stagflation in the short term.
This week all eyes will be on the decision of the Federal Reserve's Federal Open Market Committee (FOMC). After the release two weeks ago of the higher-than-expected June CPI and PPI for the United States, it has become almost certain that the American central bank will promote a rise of at least 75 basis points to the country's interest rate. The market considered the possibility of a 100-point increase but lost steam over the past two weeks after Fed members reinforced their inclination in favor of 75 points.
It will be important to follow the message conveyed by the statement and the press conference by the monetary authority Chairman Jerome Powell, where agents will look for clues about how the Fed intends to conduct monetary policy in the decisions in September, November and December. Currently, the bets for the next adjustments are very dispersed, indicating a high level of uncertainty. As a result, analysts find it difficult to consolidate a consensus about the most likely scenario for the rest of the year.
In Brazil, in a week with an empty calendar, the highlight in the political news was President Jair Bolsonaro's meeting with foreign ambassadors residing in Brazil, again attacking the Brazilian electoral system. The president's statements, a little over two months before the elections, increase investors' apprehension with an unstable political scenario in the country, which in the coming weeks is likely to take more and more of the spotlight and contribute to increased volatility in the Brazilian exchange market.
On this week's economic calendar, the Central Bank should release indicators suspended during the strike by the institution's servers. Furthermore, in the foreign scenario, besides the Fed's decision, the release of the 2nd quarter GDP in the United States on Thursday (28) and the July inflation forecast in the eurozone on Friday (29) are also worth mentioning.
Sources: ICE/NY; ICE/EU; B3; Commodity Network Trader’s Pro.
