Latam FX inch up with inflation reports on tap
Colombia's June inflation on tap at 2300 GMT
Chile's consumer prices down 0.1% in June
Latam stocks up 0.9%, FX up 0.5%
Updated at 3:17 p.m. ET/1917 GMT
By Johann M Cherian and Shristi Achar A
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 nearly 0.5% 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 bonds CL2YT=RR, CL10YT=RR, CL30YT=RR rose 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= fell 0.3%.
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= jumped 0.9% in thin trades ahead of an inflation report at 2300 GMT, with economists expecting the Consumer Price Index to increase by 0.27% in June, compared with 0.43% rise seen the month before.
"There's not a lot of progress being made on the inflation front in Colombia...so it's no surprise that BanRep's (Colombian central bank) latest decision threw cold water on expectations for a faster pace of rate cuts. With that, today's data won't help," said Juan Manuel Herrera, senior economist at Scotiabank.
Meanwhile, Mexico's headline inflation should show a clear downward trend before its central bank can lower the benchmark interest rate, deputy governor Jonathan Heath said in an interview. Its currency MXN= was up 0.6%.
Brazil's real BRL= eased 0.3% from a sharp rebound in the previous week after President Luiz Inacio Lula da Silva seemed committed to fiscal stability.
On the equities front, MSCI's index tracking regional bourses .MILA00000PUS firmed 0.9%, with heavyweight Brazil's Bovespa .BVSP adding 0.3%.
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.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters | ||
Stock indexes | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1107.31 | 0.22 |
MSCI LatAm .MILA00000PUS | 2246.98 | 0.88 |
Brazil Bovespa .BVSP | 126382.00 | 0.09 |
Mexico IPC .MXX | 52955.47 | 1.19 |
Chile IPSA .SPIPSA | 6487.11 | 0.05 |
Argentina MerVal .MERV | 1637179.29 | 0.5 |
Colombia COLCAP .COLCAP | 1382.08 | -0.11 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.4779 | -0.29 |
Mexico peso MXN=D2 | 17.9777 | 0.64 |
Chile peso CLP=CL | 939.7 | -0.30 |
Colombia peso COP= | 4042.5 | 0.95 |
Peru sol PEN=PE | 3.7774 | 0.05 |
Argentina peso (interbank) ARS=RASL | 917.0000 | -0.11 |
Reporting by Johann M Cherian and Shristi Achar A in Bengaluru; Editing by Ros Russell and Josie Kao
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