Latam FX steady as investors assess Mexico, Brazil data
Mexico's annual inflation accelerates slightly in early October
Brazil inflation picks up in mid-October
Traders: Argentina risk falls to 2020 debt rework levels
Brazil's central bank kicked off monetary tightening cycle in September
Updated at 1944 GMT
By Shashwat Chauhan and Johann M Cherian
Oct 24 (Reuters) -Most Latin American currencies traded close to the unchanged mark onThursday, as investors assessed inflation reports out ofBrazil and Mexico and braced for the outcome of crucial U.S. presidential elections.
Brazil's real BRL= inched up 0.3% to the dollar.Data showed inflation accelerated in the month to mid-October, as higher electricity costs pushed consumer prices up.
Markets are pricing in thatCopom will lift borrowing costs by at least 50 basis points in November ahead of the U.S. Federal Reserve announcing its own decision and as global markets brace for the outcome of a tight U.S. presidential election on Nov. 5.
Prediction markets favor former U.S. president Donald Trump whose tariffs are expected to be a negative for trading partners like Brazil and Mexico. Along with U.S. election uncertainty, worries about fiscal dominance in Brazil have weighed on the real - the top loser in the region.
Mexico's peso MXN= dipped 0.1% after rising for the last two sessions. Official data showed Mexico's annual inflation accelerated slightly in the first half of October.
"On the face of it, October’s mid-month inflation figure... pave the way for another 25 bps at Banxico's next meeting," said Kimberley Sperrfechter, emerging markets economist at Capital Economics.
"But the outcome of the U.S. election may well change the outlook for monetary policy in Mexico, especially if a Trump victory leads to a sharp sell-off in the peso."
Copper producer Chile'speso CLP= dipped 0.1%, while Peru's sol PEN= was flat. Prices of the red metal were marginally lower. MET/L
The Colombian peso COP= firmed 0.6% after sliding to one-year lows in the previous session.
Latin American currencies have been under pressure asthe dollar gained groundas investors scale back expectations of large U.S. rate cuts, with a recent rise in Treasury yields reflecting that sentiment.
MSCI's index for Latin American currencies .MILA00000CUS was up 0.8%, while a gauge for stocks .MILA00000PUS added 1%.
Most local bourses advanced, with Brazil's Bovespa .BVSP, Colombia's Colcap .COLCAP and Chile's main stock index .SPIPSA up between 0.5% and 0.7%.
Mexico's main stock index .MXX lost 0.8%, with Becle CUERVO.MX down 2% after the world's largest tequila maker said it sees lower net sales and capex this year than it forecast earlier.
Argentina'sMerval index .MERV jumped3.3% after three previous sessions in the red.
The World Bank and the Inter-American Development Bank (IDB)are providing Argentina with $8.8 billion in financing, as the cash-strapped government ramps up support from key lenders.
Yields on hard-currency Argentine bonds expiring in 2029 040114HX1=, AR220024407= and 2030 040114HS2=, AR217736366= fell over 100 bps. Traders said the country's risk 11EMJ fell to its lowest level since major debt restructuring in 2020.
Key Latin American stock indexes and currencies:
Latin American market prices from Reuters | ||
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1135.01 | -0.6 |
MSCI LatAm .MILA00000PUS | 2174.64 | 1.00 |
Brazil Bovespa .BVSP | 129851.77 | 0.48 |
Mexico IPC .MXX | 51728.7 | -0.79 |
Chile IPSA .SPIPSA | 6725.8 | 0.58 |
Argentina Merval .MERV | 1834213.69 | 3.376 |
Colombia COLCAP .COLCAP | 1331.28 | 0.74 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.6701 | 0.32 |
Mexico peso MXN= | 19.8468 | -0.1 |
Chile peso CLP= | 946.2 | -0.11 |
Colombia peso COP= | 4294.71 | 0.63 |
Peru sol PEN= | 3.752 | 0.03 |
Argentina peso (interbank) ARS=RASL | 985 | 0.00 |
Argentina peso (parallel) ARSB= | 1195 | 2.93 |
Reporting by Shashwat Chauhan and Pranav Kashyap in Bengaluru, editing by Deepa Babington and Nick Zieminski
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