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The dollar rose last week against its rivals in a session that was marked by the publication of the purchasing managers' index. This increased people's expectations of an interest rate rise next week. 

Dollar rises against rivals as US data and the Fed await

The dollar traded higher last week (05), in a session that was marked by the publication of the purchasing managers' index. Because of this episode, people are creating expectations for next week, since the tendency is for there to be an increase in the interest rate. 

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On the same day, in the afternoon, the American currency took a breather following the release of mixed data. On the other hand, the ISM PMI showed great strength in the US services segment. 

As the day progressed, the dollar advanced with an index of 136.72 yen, while the euro showed a retreat to US $1.0491. The index that measures the dollar is known as the DXY, which uses the dollar against a basket of strong currencies. 

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According to reports, the euro reached its highest level in more than five months, even compared to the dollar. The currency remained buoyant, even after another round of worrying European data. 

The members of the ECB continue in an aggressive tone, in line with previous speeches. Gabriel Makhlouf said the increase of 50 basis points was the minimum necessary to keep bringing inflation back down. As for Villeroy de Galhau, from the same institution, he said that it was too early to talk about the terminal interest rate.

As soon as news of the cooling of the anti-covid policy was announced, the pound stabilized on the market. According to analysis made during the conversation, the pound shines when pound sentiment improves. 

Meaning of FED

The FED is the key word in the US economy, setting the stage for important global investments. The FED is the equivalent of Brazil's Central Bank and is fundamental in many ways. 

However, despite its importance, not everyone realizes how important the FED is for the economy. However, it can affect the day-to-day lives of investors, so it's important to know about the concept. 

FED is the acronym used to refer to the Federal Reserve Board. This financial institution manages the country's entire financial system, as well as setting monetary policy. 

To understand how the system works, it's enough to understand how it operates within the banking system. The EDF is independent, i.e. it acts independently of the executive, legislative and judicial branches. 

This means that the financial institution has the freedom to make decisions, without the need to ask the government for permission. In this way, it is possible to keep the economy running smoothly without political interference. 

As one of the main pillars of the investment scenario, the Fed's decisions have a direct impact on this segment in Brazil. The Selic treasury and the IPCA treasury are two examples we can't fail to mention. 

History of the EDF

Founded in 1913, the FED is considered one of the main systems within the global investment landscape. At the time, the chairman of the country's Finance Committee used the same banking system as Germany. 

In 1935, at a time that became known as the Great Depression, the Federal Reserve played an extremely important role in keeping interest rates close to the agreed level on federal government bonds. 

The objective of the FED has been consolidated with each passing day. Today, it continues to work hard to keep the financial system of the United States of America running, leaving the area of finance as stable as possible. 

Its importance on the world economic stage is irrefutable. And because of this, the FED ends up having an impact on finances all over the world, even affecting the Ibovespa indices in some situations, as well as other international indices. 

Objective of the EDF

One of the FED's main objectives is to ensure that the country's monetary policy is sound and that growth in the United States of America is healthy. It is possible to highlight the great solidity of financial institutions, thanks to the regulation and supervision that takes place in the market. 

This institution determines the purchase and sale of public securities, keeping the economy regulated and the financial system in order. The FED supervises the central banks, ensuring that the spheres of the sector function well. 

Another function of this institution is to print the country's currency, which will be used in day-to-day financial transactions. The FED is also responsible for offering the best interest rate conditions to consumers. 

In short, for the economy to continue to develop in a healthy way, this system is essential for the country. The importance of the Fed is clear, especially in terms of keeping the world's economy running. 

Impact in Brazil

As mentioned earlier, the Federal Reserve is of great importance to the economic scenario. After all, the United States of America is a great power, and it's clear that it has a direct impact on the economy around the world. And this is also true in Brazil. 

In this sense, the variation in the US interest rate influences the Brazilian investment market, since the dollar can change according to this function. In addition, the price of commodities is dollarized, directly impacting the economy. 

There are many products priced in dollars, such as meat, soybeans, minerals and other items. This also varies according to the supply and demand of goods in the local economy. When investors buy US bonds, there is less money to invest. 

Brazil's investments tend to become scarce and, consequently, the country's economic activity tends to decline. On the other hand, when interest rates are very low in the United States, local investors may find more lucrative options.

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