Latam currencies set to log weekly gains as Fed rate cut bets firm

* Sheinbaum taps Garcia Harfuch as security minister * Argentina analysts lower inflation forecast for 2024 * MSCI Latam FX index to notch first weekly gain since May * Latam stocks flat, FX gains 0.3% By Johann M Cherian July 5 – Latin American currencies edged higher on Friday as a softer U.S. jobs report firmed investor bets on a September rate cut from the Federal Reserve, while concerns around fiscal stability in the region lingered. MSCI’s index tracking currencies in the region gained 0.3% against the dollar, set for its first weekly gain since May 13. Investors assessed data which showed U.S. jobs growth slowed and unemployment rose, holding on to bets that the Federal Reserve might deliver two interest rate cuts in 2024. Most central banks in Latin America have paused their monetary easing cycles, as analysts expect the Fed to defer its first interest rate cut. Brazil’s real advanced 0.4%, on track for a weekly gain of over 2%. The currency made gains in the last two sessions after President Luiz Inacio Lula da Silva committed his government to fiscal stability. The leader’s comments on greater fiscal spending and on the domestic central bank’s stance on restrictive monetary policy had depressed the real towards the end of the second quarter. “After a sharp sell-off over the past month, we believe the market is close to hitting bottom,” said Elizabeth Johnson, managing director, Brazil research at TS Lombard. “Lula’s attacks on Banco Central Governor Campos Neto are likely to cease for now, but market jitters are only likely to fully dissipate when a new governor is named.” Mexico’s peso edged 0.1% lower, set to snap a three-session winning streak. President-elect Claudia Sheinbaum continued to name cabinet officials ahead of taking office on Oct 1, with Omar Garcia Harfuch set to be her security minister. Oil producer Colombia’s added 0.4% in light trading, while copper producer Chile lost 0.3%. Chile’s finance minister Mario Marcel said the economy showed weakness in June, but is expected to improve in the second half of this year. On the equities front, a gauge tracking regional bourses held steady, but was set for a weekly rise of over 2%. Brazil’s Bovespa traded flat, while Mexican stocks lost 0.6%. Argentina’s peso traded at 1400 to the dollar in parallel trade, while the MerVal index rose 0.9%, ahead of a monetary policy report by the domestic central bank later in the day. A central bank survey showed analysts expect annual inflation to stand at 138.1%, compared with an earlier estimate of 146.4%. Key Latin American stock indexes and currencies: Latin American market prices from Reuters Stock indexes Latest Daily % change MSCI Emerging Markets 1106.13 0.18 MSCI LatAm 2232.73 0.05 Brazil Bovespa 126214.48 0.04 Mexico IPC 52309.95 -0.66 Chile IPSA 6470.84 -0.94 Argentina MerVal 1627143.65 0.893 Colombia COLC 1379.77 -0.36 Currencies Latest Daily % change Brazil real 5.4647 0.38 Mexico peso 18.0870 -0.06 Chile peso 936.9 -0.29 Colombia peso 4076.21 0.37 Peru sol 3.7804 -0.03 Argentina peso 915.0000 -0.11

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