Mexican peso leads Latam FX lower as Trump's tariff pledge continues to weigh
Mexican peso pinned at lowest level in more than two years
Latam FX down 0.3%, stocks off 0.5%
By Shashwat Chauhan
Nov 27 (Reuters) -The Mexican peso led losses amongst Latin American peers on Wednesday, a day after hitting multi-year lows after U.S. President-elect Donald Trump's tariff pledges, while investors parsed fresh inflation data out of the United States.
Mexico's peso MXN= was last down 0.4%, a day after hitting its lowest level in more than two years when Trump said he would impose a 25% tariff on imports from Canada and Mexico.
"We're highly skeptical that Trump will actually impose new tariffs on Mexico and Canada, and we see his messages as an effective "pressure tactic" to get Mexico and Canada to issue concessions," said Thierry Wizman, Macquarie Group's global FX and rates strategist.
"Trump's disposition toward Mexico is bad for the MXN, but not that bad."
Mexican Economy Minister Marcelo Ebrard said on Wednesday that the tariffs would cause the loss of 400,000 jobs and slow growth in the United States, while also hitting Mexican exports.
Brazil's real BRL= weakened slightly, down 0.3% to 5.8283 per dollar. Investors in Latin America's biggest economy would be on the lookout for the release of a fiscal package with spending cuts.
Finance Minister Fernando Haddad said earlier the government will be ready to announce the details this week.
In Colombia, two sources from the government said that it will cut the budget for this year by 28.4 trillion pesos ($6.44 billion) as lower-than-expected tax collection hits public coffers. The peso COP= was down 0.3% in light trading.
Latin American assets have run into turbulence in November, with currencies of Mexico and Brazil amongst the worst performers in emerging markets as investors mull the implications of Trump's policies on trade, tariffs and immigration.
Continued repricing of the Federal Reserve's interest rate path has also helped the dollar globally, weakening EM currencies.
Meanwhile, U.S. consumer spending increased solidly in October, suggesting that the economy maintained its strong pace of growth early in the fourth quarter, but progress lowering inflation appears to have stalled in the past months.
MSCI's index for Latin American currencies .MILA00000CUS dipped 0.3% as of 10:20 a.m. ET, while a gauge for stocks .MILA00000PUS lost 0.5%.
JPMorgan upgraded Mexican equities to "overweight" from "neutral" on the back of strong U.S. growth, but cut Brazilian equities citing slower growth in China amid emerging pressures from President-elect Donald Trump's tariff policy.
Credit ratings agency Moody's upgraded El Salvador's credit rating to 'B3', stating that the Central American nation's credit profile benefited from recent liability management operation.
HIGHLIGHTS
** IMF, Ethiopia reach staff-level agreement on second review of financing programme - statement
** Peru Congress removes mining minister as small miners snarl roadways
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1088.74 | 0.17 |
MSCI LatAm .MILA00000PUS | 2063.93 | -0.53 |
Brazil Bovespa .BVSP | 129615.2 | -0.24 |
Mexico IPC .MXX | 49819.89 | 0.2 |
Chile IPSA .SPIPSA | 6589.43 | 0.47 |
Argentina Merval .MERV | 2235606.22 | -0.74 |
Colombia COLCAP .COLCAP | 1392.94 | 0.13 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.8283 | -0.32 |
Mexico peso MXN= | 20.711 | -0.41 |
Chile peso CLP= | 976.6 | 0.01 |
Colombia peso COP= | 4410.27 | -0.27 |
Peru sol PEN= | 3.761 | 0.05 |
Argentina peso (interbank) ARS=RASL | 1008 | -0.05 |
Argentina peso (parallel) ARSB= | 1105 | 2.71 |
Reporting by Shashwat Chauhan in Bengaluru; Editing by Angus MacSwan
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
