Latin American markets rise as dovish Fed bets weaken dollar
Updated at 1510 GMT
Chile GDP slips in Q2
Brazil's XP predicts rate hikes at BCB's next meeting
Mexican economy up 1.1% y/y in July
Colombian markets closed
MSCI Latin American stocks index up 1.2%, FX up 0.7%
By Lisa Pauline Mattackal
Aug 19 (Reuters) -Most Latin American stocks and currencies tracked emerging market peers higher on Monday, as growing hopes of stable economic growth and looser monetary policy in the United States lifted risk sentiment and weakened the dollar.
The dollar =USD weakened 0.5% against a basket of currencies to January lows, lifting MSCI's international emerging market currency index .MIEM00000CUS 0.7% to a record high at the start of a week packed with central bank events.
MSCI's index tracking Latin American currencies .MILA00000CUS jumped 0.7%, while an index of stocks .MILA00000PUS gained 1.2% to an over two-month high.
After bouts of volatility, emerging market assets looked set to build on gains from the previous week as data pointing to U.S. economic growth soothed worries about slowing global demand.
Focus will now be on U.S. Fed Chair Jerome Powell's Friday speech in Jackson Hole, where investors anticipate he will acknowledge the case for easing borrowing costs.
On the data front, Chile's peso CLP= gained over 1% against the dollar, with a rise in copper prices offsetting data that showed the country's gross domestic product (GDP) slipped in the second quarter.
Chile's Q2 GDP fell 0.6% on a quarterly basis, in line with forecasts and likely opening the door for more interest rate cuts this year.
Brazil's real BRBY also notched gains of over 1% against the dollar, trading at an over one-month high, while the country's main stock index .BVSP gained about 1%.
Economists now see Brazil's benchmark interest rate at the end of 2025 at 10% from the 9.75% previously expected, a weekly central bank survey showed. A growing number of forecasters now see the bank hiking rates at its September meeting.
"The (monetary policy committee) Copom has emphasized its data-dependent stance. And recent indicators suggest that monetary policy is not sufficiently restrictive," XP economists led by Caio Megale wrote in a note to clients.
The Mexican peso MXN=D2, however, lagged regional peers, losing 0.6% after rising for the past four trading sessions.
Preliminary estimates showed Mexico's economy likely grew 1.1% in July compared with the same month a year earlier, national statistics agency INEGI said, and the economy likely dropped 0.1% on a monthly basis.
On a year-to-date basis, all major Latin American currencies still remain down against the dollar with the greenback strengthening nearly 12%, 11%, and 4% respectively against the Mexican peso, Brazilian real and Colombian peso.
Among local equity markets, Argentina's Merval .MERV led gains, up 1.1% while stocks in Peru .SPBLPGPT underperformed, losing 0.3%.
Local Colombian markets were closed for a holiday.
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Key Latin American stock indexes and currencies
MSCI Emerging Markets .MSCIEF | 1104.02 | 0.95 |
MSCI LatAm .MILA00000PUS | 2343.25 | 1.18 |
Brazil Bovespa .BVSP | 135264.8 | 0.98 |
Mexico IPC .MXX | 54237.59 | 0.28 |
Chile IPSA .SPIPSA | 6460.77 | 0.87 |
Argentina Merval .MERV | 1668026.98 | 1.134 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.4153 | 1.1 |
Mexico peso MXN= | 18.736 | -0.56 |
Chile peso CLP= | 926.71 | 1.19 |
Colombia peso COP= | 4027.11 | 0.09 |
Peru sol PEN= | 3.7328 | -0.36 |
Argentina peso (interbank) ARS=RASL | 943.5 | -0.158982512 |
Argentina peso (parallel) ARSB= | 1330 | 1.127819549 |
Emerging market currencies gain as dollar weakens https://reut.rs/3X8O82n
Reporting by Lisa Mattackal and Marcela Ayres; Editing by Nick Zieminski
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