Mexican peso leads Latam FX lower as rate worries weigh
Mexico GDP weakens, peso falls to near seven-week low
Commodity currencies slip as China demand worries weigh
Venezuela in focus as anti-Maduro protests spread
Chile rate decision awaited later in the day
Updated at 3:30 p.m. ET/1930 GMT
By Lisa Pauline Mattackal and Shashwat Chauhan
July 30 (Reuters) -Mexico's peso led broader declines in Latin American currencies after weaker-than-expected economic data, while worries about commodity demand in China and caution ahead of a bevy of key central bank decisions weighed on sentiment.
Mexico's economy grew 0.2% in the second quarter, versusanalysts expectations ofa 0.4% rise.
Slowing growth in Latin America's largest economy fueled expectations for the central bank to cut interest rates at its August meeting, weighing on Mexico's peso MXN= which fell 0.6% to 18.746 perdollar, hitting itslowest in nearly seven weeks.
"The performance of the economy in H1 would be supportive of an eventual resumption of policy normalization once risk management considerations can be sent again to the back burner and the canonical inflation activity balance can be given preeminence again in policy deliberations," Deutsche Bank analysts wrote in a note.
Worries about commodity demand from China, the world's second-largest economy, also weighed on producers in Latin America, after there were no specific new stimulus efforts announced at the country's Politburo meeting.
Oil slumped to its lowest since June, while major metals including iron ore and copper also lost ground. MKTS/GLOBO/R
Trading was also cautious ahead of the U.S. Federal Reserve's policy decision on Wednesday, with investors watching for a dovish tone from policymakers to gauge whether market bets on a September rate cut are on the right track.
Chile's peso <CLP=> shrugged off initial losses and was up 0.1%ahead of the Banco Central de Chile's policy decision later in the day, where the bank is expected to ease its main lending rate by 25-basis-points.
Rate decisions from both Colombia and Brazil are also on deck onWednesday. Colombia is expected to ease policy from 11.25% to 10.75%, while Brazilian policymakers are expected to hold borrowing costs again at 10.5%.
Rate trajectories in the region highlight the challenges facing central banks in the region as they balance the need to boost economic growth with an uncertain global macroeconomic scenario and higher-for-longer rates in major developed economies such as the U.S.
The Colombian peso COP= lost 0.5%, while Brazil's real BRL= was down 0.1%.
MSCI's indexes tracking the region's stocks .MILA00000PUS was down 0.3%, withBrazil's Bovespa .BVSP down 0.6%, while Argentina's Merval .MERV slipped 4.4% to an over two-month low.
Commodity price declines dragged Brazil's Vale VALE3.SA and Petrobras PETR4.SA which lost 1.8% and 1%, respectively.
Venezuelan politics remained in focus, with protests spreading throughout the country after Nicolas Maduro was announced the winner of its presidential election despite the opposition claiming victory.
Venezuela's dollar-denominated bonds USP97475AN0=1M, USP97475AJ9=1M were broadly steady after sharp declineson Monday.
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Key Latin American stock indexes and currencies:
Latest | Daily % change | |
MSCI Emerging Markets .MSCIEF | 1072.20 | -0.47 |
MSCI LatAm .MILA00000PUS | 2172.67 | -0.31 |
Brazil Bovespa .BVSP | 126251.39 | -0.55 |
Mexico IPC .MXX | 52360.84 | -0.3 |
Chile IPSA .SPIPSA | 6472.98 | -0.2 |
Argentina MerVal .MERV | 1417202.78 | -4.323 |
Colombia COLCAP .COLCAP | 1333.49 | -0.54 |
Currencies | Latest | Daily % change |
Brazil real BRBY | 5.6232 | 0.03 |
Mexico peso MXN=D2 | 18.7470 | -0.64 |
Chile peso CLP=CL | 954.2 | -0.12 |
Colombia peso COP= | 4080.32 | -0.51 |
Peru sol PEN=PE | 3.7229 | -0.04 |
Argentina peso (interbank) ARS=RASL | 932.0000 | 0.00 |
Argentina peso (parallel) ARSB= | 1365 | 3.66 |
Caracas claw back https://reut.rs/46ng45C
Reporting by Lisa Mattackal and Shashwat Chauhan in Bengaluru; Editing by Marguerita Choy
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