Brazil's real scales 3-week high as US jobs data backs Fed cut bets
Weak dollar boosts Latam FX, stocks
Traders price in more US rate cuts
Brazil's industrial output up less-than-expected in March
Panama presidential election on Sunday
Updated at 1848 GMT
By Sruthi Shankar and Johann M Cherian
May 3 (Reuters) -Most Latin American currencies climbed on Friday, with the Brazilian real touching a three-week high versus the dollar after weaker-than-expected U.S. jobs data raised expectations of U.S. interest rate cuts starting as early as September.
The real BRL= jumped 0.9% to 5.06 per dollar, its strongest level since April 11. Other currencies in the region also firmed, with a broader gauge .MILA00000CUS set for its second weekly gains.
The dollar =USD weakened, as traders priced in two U.S. interest rate cuts of 25 basis points this year after data showed U.S. job growth slowed more than expected in April and annual wage gains cooled.
Emerging market currencies have come under pressure this year as several countries including Brazil, Chile and Mexico kickstarted rate-cutting cycles early to spur their economies even as the Fed kept rates elevated due to sticky U.S. inflation and resilience in the world's largest economy.
On the day, Brazil's industrial production rose 0.9% in March, marginally missing the 1% growth economists polled by Reuters were expecting.
Andres Abadia, chief latam economist at Pantheon Macroeconomics called it a solid report.
"Survey data have been improving in recent quarters ... rising consumer spending, helped by lower interest rates and tame inflation, will continue to drive the modest industrial recovery this year," Abadia added.
Brazil's Copom bank is set to meet next week, with economists split over the size of a likely rate cut.
A weaker greenback also sparked a rebound in copper prices, further supporting gains in currencies of producers of the red metal in the region: Chile CLP= and Peru PEN=. MET/L
Meanwhile, a Reuters poll showed foreign exchange experts expect a small depreciation in the Mexican peso MXN= in the medium term as the country navigates between a relatively firm economy on one side and some political doubts on the other. On the day, the peso inched up 0.2%.
Stock markets in the region also climbed with indexes in Brazil .BVSP, Mexico .MXX and Colombia .COLCAP up between 0.3% and 1.1%. The Latam MSCI stocks index .MILA00000PUS was also on track for weekly gains of 1.1%.
Investors will keep an eye on Sunday's presidential election in Panama, where eight candidates are on the ballot, and polls show mixed rankings among the five frontrunners.
The Central American country's government rebuked Fitch Ratings late in March after it cut Panama's sovereign bonds to speculative grade, or junk status. Panama is at risk of losing the coveted investment grade following concerns over its fiscal and governance challenges that have been aggravated by the closure of the country's largest mine.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters | ||
Stock indexes | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1062.77 | 0.94 |
MSCI LatAm .MILA00000PUS | 2491.90 | 1.02 |
Brazil Bovespa .BVSP | 128623.20 | 1.18 |
Mexico IPC .MXX | 57045.64 | 0.65 |
Chile IPSA .SPIPSA | 6558.74 | 0.93 |
Argentina MerVal .MERV | 1430075.54 | 4.41 |
Colombia COLCAP .COLCAP | 1382.74 | 0.29 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.0666 | 0.90 |
Mexico peso MXN=D2 | 16.9583 | 0.04 |
Chile peso CLP=CL | 938.2 | 0.61 |
Colombia peso COP= | 3906.5 | -0.22 |
Peru sol PEN=PE | 3.718 | 0.02 |
Argentina peso (interbank) ARS=RASL | 878.5000 | 0.00 |
Argentina peso (parallel) ARSB= | 1020 | 1.96 |
Reporting by Sruthi Shankar and Johann M Cherian in Bengaluru; editing by Mark Heinrich and Jonathan Oatis
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