FX.co ★ Brazilian Real Hovers at 8-Month Highs

In June, the Brazilian real remained steady around 5.49 per USD, marking its strongest position in eight months. This stability comes as investors analyzed the latest labor market statistics while the US dollar experienced a period of weakness. Notably, unemployment fell to 6.2% in the three months leading up to May, down from 6.6% in April, with formal employment reaching a record high of 39.76 million. This backdrop supports household consumption and boosts real incomes. The data further justified the central bank's decision to maintain the Selic rate at an unprecedented 15%. Minutes from Copom indicate a pause in tightening monetary policy, highlighting that rates will be held at this level for a "very prolonged period." This strategy aims to ensure inflation converges, maintain significant real interest-rate differentials, and attract carry flows. Concurrently, the US dollar reached its lowest point since February 2022, influenced by increasing expectations of Federal Reserve rate cuts amid dovish commentary from the Fed, alongside sluggish consumer spending and modest inflation data.