Latam FX inch up with inflation reports on tap; Chilean yields tick up
Updated at 1437 GMT
Colombia's June inflation on tap at 2300 GMT
Chile's consumer prices down 0.1% in June
Latam stocks up 0.1%, FX up 0.3%
Bank of Israel keeps benchmark interest rate at 4.5%
By Johann M Cherian
July 8 (Reuters) -Most Latin American currencies kicked off the week higher, with focus on inflation reports out of local economies lined up through the week, while Chilean bond yields ticked up as traders expected a hawkish stance on interest rates later in the month.
MSCI's index tracking Latin American currencies .MILA00000CUS firmed 0.3% against the dollar on Monday on expectations the U.S. Federal Reserve could lower interest rates at least twice in 2024 on signs of benign inflation and a softening labor market.
Meanwhile, yield on Chile's sovereign bond CL2YT=RR, CL10YT=RR, CL30YT=RR rose between 1 to 7 basis points (bps) after a central bank's poll showed traders expect the regulator to hold its benchmark interest rate at 5.75% at its next monetary policy meeting later this month. The peso CLP= was largely flat.
Separately, data showed consumer prices fell 0.1% in June from the previous month, compared with economists' expectations of a 0.04% slip.
"Persistent tight financial conditions continue to restrain overall inflation, and the anticipated impact of increased electricity tariffs was less pronounced than expected," Andres Abadia, chief Latam economist at Pantheon Macroeconomics said.
The peso has depreciated over 6% this year as the copper producer's central bank kicked off its monetary policy easing cycle earlier in the year. However, the currency found some support as the regulator shifted to a more hawkish stance and prices of the red metal got a lift.
Colombia's peso COP= inched up 0.8% in thin trades ahead of the release of an inflation report at 2300 GMT, with economists expecting the Consumer Price Index to increase by 0.27% in June, less than the 0.43% rise seen the month before.
Copper producer Peru's PEN= sol strengthened 0.4%, while Mexico's peso MXN= appreciated 0.7%.
Brazil's real BRL= underperformed peers, easing 0.6% from a sharp rebound in the previous week after President Luiz Inacio Lula da Silva seemed committed to fiscal stability.
Yield on sovereign bonds BR2YT=RR, BR5YT=RR, BR10YT=RR also dropped 8-9 bps, ahead of June consumer prices data due later in the week, which is expected to show a moderation in price pressures.
On the equities front, MSCI's index tracking regional bourses .MILA00000PUS edged higher 0.1%, with heavyweight Brazil's Bovespa .BVSP limiting gains with its 0.3% decline.
Chile's main index .SPIPSA was flat. The Andean country saw copper exports increase in June, up 8% from a year earlier, helping it achieve a trade surplus of nearly $2 billion during the month.
Elsewhere in emerging markets, the shekel ILS= appreciated 0.3% after the Bank of Israel held interest rates steady.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters | ||
Stock indexes | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1107.21 | 0.21 |
MSCI LatAm .MILA00000PUS | 2232.46 | 0.22 |
Brazil Bovespa .BVSP | 125974.95 | -0.23 |
Mexico IPC .MXX | 52471.57 | 0.26 |
Chile IPSA .SPIPSA | 6487.32 | 0.06 |
Argentina MerVal .MERV | 1630973.34 | 0.119 |
Colombia COLCAP .COLCAP | 1381.17 | -0.17 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.4874 | -0.47 |
Mexico peso MXN=D2 | 17.9960 | 0.54 |
Chile peso CLP=CL | 937.2 | -0.03 |
Colombia peso COP= | 4053.74 | 0.67 |
Peru sol PEN=PE | 3.7928 | -0.35 |
Argentina peso (interbank) ARS=RASL | 916.5000 | -0.05 |
Argentina peso (parallel) ARSB= | 1405 | 1.07 |
Reporting by Johann M Cherian in Bengaluru; Editing by Ros Russell
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