Brazilian Real Rises on Weaker-Than-Forecast U.S. Economic Data

Brazil’s real gained the most in a week after the U.S. reported consumer spending and economic growth that was less than forecast, signaling policy makers in the world’s biggest economy will keep borrowing costs at record lows, increasing demand for higher-yielding assets.

The real advanced 0.9 percent to 1.6151 per dollar, the strongest in a week, as of 5:45 p.m. in New York, from 1.6292 yesterday.

U.S. consumer spending cooled in the first quarter more than previously estimated and economic growth was slower than analysts forecast. Brazil’s unemployment rate fell in April to the lowest for the month since at least 2002, keeping pressure on policy makers to raise interest rates to control inflation.

“The weak U.S. data are fueling bets that the Fed will keep interest rates low, signaling the dollar will continue weakening,” said Mauricio Junqueira, who helps manage $300 million at Squanto Investimentos in Sao Paulo.

The dollar index, which tracks the currency’s value against those of six major trading partners, dropped 0.5 percent to 75.57. It earlier fell as much as 0.8 percent, the most in a month.

Household purchases in the U.S. rose at a 2.2 percent annual pace from January through March, less than the 2.7 percent calculated last month and short of the 2.8 percent median forecast of economists surveyed by Bloomberg, according to Commerce Department figures today. The U.S. economy expanded at a 1.8 percent annual rate in the quarter, compared with the 2.2 percent median forecast in the survey.

Brazil Unemployment

Unemployment in Brazil fell to 6.4 percent last month from 6.5 percent in March, the national statistics agency said today in Rio de Janeiro.

Brazilian central bankers have raised the country’s benchmark rate 325 basis points, or 3.25 percentage points, to 12 percent since April 2010 to rein in the fastest inflation in six years. The U.S.’s key rate is between zero and 0.25 percent.

Yields on the interest-rate futures contract due in January 2013 fell three basis points, or 0.03 percentage point, to 12.56 percent.

To contact the reporters on this story: {Josue Leonel} in Sao Paulo at jleonel@bloomberg.net; {Belinda Cao} in New York at Lcao4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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