Latin American currencies, stocks edge higher ahead of US jobs data
Mexican peso hits 20 per dollar for first time since Aug. 5
Mexico's bank regulator approves stock market overhaul
Markets still see chance of 50-basis-point Fed rate cut
Egypt's central bank keeps rates on hold
Latin American FX index up 0.2%, stocks up 0.3%
Updated at 1940 GMT
By Shashwat Chauhan and Lisa Pauline Mattackal
Sept 5 (Reuters) -Most Latin American currencies climbed againsta lackluster dollaron Thursday, as a mixed bag of U.S. economic data ahead of a key labor market report kept bets ona Federal Reserve interest rate cut this month intact.
The dollar =USD slippedafter data showed U.S. private employers hired the fewest number of workers in 3-1/2 years in August, while separate data showed services sector activity was steady in August.
MSCI's index for Latin American currencies .MILA00000CUS rose 0.2%, while a gauge for stocks .MILA00000PUS gained 0.3%.
Investors globally have been cautious this week on signs of slowing growth in U.S. economy, while some uncertainty remains over how much the Federal Reserve could ease policy at its Sept. 17-18 meeting.
The release on Friday of the U.S. employment report for August couldbe key in gauging the size of the potentialrate cuts ahead of inflation data later this month. Market bets still favor a 25-basis-point rate cut at the policy-setting Federal Open Market Committee's meeting in two weeks, with a roughly40% chance of a 50-basis-point move, according toCME Group's FedWatchTool.
"A rate reduction at the FOMC's upcoming meeting on September 18 looks all but certain, but the upcoming CPI report could serve as a tiebreaker between a 25- or 50-bp cut if the August jobs report lands in the gray zone between clearly weak and clearly strong," Wells Fargo analysts wrote in a note.
Lower U.S. interest rates typically benefit higher-yielding, but riskier emerging market assets and would help relieve pressure on weakening currencies in Latin America.
Brazil's real BRL= led gains in the region, adding 1.1% against the dollar in its best day in nearly two weeks. A Brazilian central bank official said policymakers have taken note of the country's stronger economic growth and currency since their last policy meeting.
Meanwhile, Mexico's peso MXN= slipped 0.1% to 19.9431 afterbriefly touching the 20-per-dollar levelfor the first time in more than a month, as jitters persisted after the lower house of Congress approved an overhaul of the country's judiciary early on Wednesday.
Colombia's peso COP= appreciated 0.5%, whileChile's peso CLP= was flat.
A Reuters poll of FX strategists showed Brazil's real will continue to be restrained by worries about the country's fiscalsituation in the near future, while most respondents saw risks for the Mexican peso tilted to the downside.
Local stock exchanges were broadly higher, with Brazil's Bovespa .BVSP up 0.3%. Mexican stocks .MXX lost 0.2%.
Mexico's bank regulator approved the terms of a stock market reform that was passed last year, which could loosen regulations for companies to go public, speed up the process and reduce the costs involved.
Ghana launched a restructuring agreement for roughly $13 billion of its international bonds.
HIGHLIGHTS
** Codelco buys Enami's 10% stake in Teck's Quebrada Blanca mine
** Venezuela's oil exports climb to four-year high in August
** Brazil's auto production up, sales down in August
**Egypt's central bank leaves interest rates on hold
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1077.07 | 0.32 |
MSCI LatAm .MILA00000PUS | 2232.9 | 0.26 |
Brazil Bovespa .BVSP | 136554.16 | 0.33 |
Mexico IPC .MXX | 51709.15 | -0.2 |
Chile IPSA .SPIPSA | 6360.26 | -0.45 |
Argentina Merval .MERV | 1767646.36 | -1.629 |
Colombia COLCAP .COLCAP | 1341.27 | 0.38 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.5754 | 1.14 |
Mexico peso MXN= | 19.9426 | -0.09 |
Chile peso CLP= | 942.59 | 0.01 |
Colombia peso COP= | 4156 | 0.55 |
Peru sol PEN= | 3.7755 | -0.12 |
Argentina peso (interbank) ARS=RASL | 953.5 | 0 |
Argentina peso (parallel) ARSB= | 1245 | 4.819277108 |
Reporting by Shashwat Chauhan and Lisa Mattackal in Bengaluru; Editing by Andrea Ricci and Paul Simao
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