Most Latam currencies fall, set for monthly losses as dollar firms on hope of smaller Fed cuts
Brazil's central bank holds surprise swap auction
Mexico's peso set for near 6% monthly drop
Latam stocks up 0.2%, FX adds 0.3%
Peru markets closed
Updated at 1950 GMT
By Shashwat Chauhan and Lisa Pauline Mattackal
Aug 30 (Reuters) -Most Latin American currencies slipped on Friday, as the U.S. dollar firmed after data supported the likelihood of smaller interest rate cuts by the Federal Reserve.
The dollar index =USD rose after data showed U.S. consumer spending rose in July, while the personal consumption expenditures (PCE) price index - the Fed's preferred inflation gauge - rose 0.2% last month.
The data saw traders further trim bets on a larger 50 basis point interest rate cut from the Fed next month, meaning pressure on emerging markets from a stronger dollar and elevated U.S. borrowing costs were likely to continue despite the Fed still being expected to cut rates by 25 bps.
"(U.S.)consumer spending remains very robust and this may make the Fed reluctant to move aggressively," analysts at ING said in a note.
Most Latin American currencies slipped against the dollar, with Brazil's real BRL= down 0.2%, Chile's peso CLP= slipping 0.1% and Colombia's peso COP= easing 1.6% to a nearly four-week low.
The real pared some early losses after the central bank sold $765 million in a surprise swap auction, after previously selling the entire $1.5 billion it offered in a spot auction.
Mexico's peso MXN=, however, bucked the trend to rise 0.8%. Still, it was set for a close to 6% monthly drop - its third monthly decline - as worries about domestic judicial reforms and expectation of dovish central bank policy saw investors grow less positive on the currency.
The peso's gains kept MSCI's index for Latin American currencies .MILA00000CUS supported, up 0.3%, while a gauge for stocks .MILA00000PUS rose 0.2%.
Amongst equities, Brazil's Bovespa .BVSP dipped 0.4% and Mexican stocks .MXX slipped 0.5%, though Colombia's Colcap .COLCAP gained 2% and Argentina's Merval .MERV jumped 3.5% to an over one-month high.
The currency index was set to lose 0.6% for the month. The stocks index was on track to gain 1.6%, slightly outperforming MSCI's gauge of global emerging market stocks' .MSCIEF 1.3% rise.
August closes a turbulent month for global risk assets, which tumbled early in the month on worries about U.S. economic growth and an unwinding of yen currency carry trades.
High-yielding Latin American currencies saw sharp declines, but have since recovered some ground as positive U.S. data and policymaker comments cemented expectations for the Fed's first interest rate cut.
Still, most Latin American currencies were set for monthly losses against the dollar. The greenback, however, weakened about 3% against Chile's peso and 0.1% against the real on a monthly basis.
Brazil's central bank chief Roberto Campos Neto said rate adjustments would be "gradual."
Markets in Peru were shut for a public holiday.
HIGHLIGHTS
** Brazil's jobless rate drops to 6.8% in quarter through July
** Chile's copper output, manufacturing production up in July
** Kenya's inflation rises slightly to 4.4% yr/yr in August
** Maldives bonds at record low after Fitch downgrade amid default concerns
Key Latin American stock indexes and currencies:
MSCI Emerging Markets .MSCIEF | 1099.51 | 0.42 |
MSCI LatAm .MILA00000PUS | 2240.71 | 0.16 |
Brazil Bovespa .BVSP | 135454.44 | -0.43 |
Mexico IPC .MXX | 52861.28 | -0.52 |
Chile IPSA .SPIPSA | 6438.08 | -0.16 |
Argentina Merval .MERV | 1719464.93 | 3.573 |
Colombia COLCAP .COLCAP | 1362.28 | 2.02 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.6356 | -0.16 |
Mexico peso MXN= | 19.6847 | 0.76 |
Chile peso CLP= | 913.42 | -0.12 |
Colombia peso COP= | 4178.5 | -1.63 |
Peru sol PEN= | 3.748 | -0.21 |
Argentina peso (interbank) ARS=RASL | 950.5 | 0 |
Argentina peso (parallel) ARSB= | 1285 | 2.33463035 |
Major EM currencies this month https://tmsnrt.rs/4dI4FAa
Reporting by Shashwat Chauhan and Lisa Mattackal in Bengaluru; editing by Barbara Lewis and Jonathan Oatis
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.
