|Day's Range||5,041.52 - 5,072.83|
|52 Week Range||4,798.35 - 5,515.95|
The peso fell over 0.6% after Pemex reiterated the government would reduce taxes on the world's most indebted oil company by some $7 billion over the next two years, injecting capital for a refinery and higher output. "In our view, the probability of a downgrade to junk by Moody's has gone higher." Pemex Chief Executive Octavio Romero said a more detailed, 200-page version of the plan would be unveiled later on Tuesday. Mexico's main stock index dropped about 0.4%, led by a 5% loss in broadcaster Televisa while financial stocks also dropped.
MSCI's index of Latin American currencies touched its highest levels since April 2018 with Brazil's real holding at over three-month highs as investors welcomed progress in the government's pension reform bill. Mexico's peso which had a shaky week after the abrupt resignation of the finance minister managed to recover most of its losses, ending the week flat. The Colombian and Chilean peso both rose 0.2%.
MSCI's Latin American currencies moved o.6% higher in line with emerging market peers as expectations of an interest rate cut by the Fed bodes well for developing market assets. The Mexican peso, which slid following the finance minister's abrupt resignation on Tuesday, gained 0.3%, but overhangs regarding the country's fiscal status kept investors nervous. All five of the Mexican central bank's board members agreed the slowdown in Mexico's economy had been larger than anticipated, with "signs of weakness" in the second quarter, minutes from the June 27 monetary policy meeting showed on Thursday.
The Brazilian real jumped 0.4%, its fourth straight day of gains that took the currency to over a four-month high, although the Bovespa stock index retreated from a record high set in the previous session. Brazil's markets have rallied this week as investors draw comfort from progress in the government's efforts to overhaul the pension system, a cornerstone of President Jair Bolsonaro's economic agenda aimed at saving the public purse around 1 trillion reais ($263 billion) over the next decade. House Speaker Rodrigo Maia said he hoped the complete bill could be put to a second, final vote by Friday or early Saturday.
Fed Chairman Jerome Powell said concerns about trade policy and a weak global economy "continue to weigh on the U.S. economic outlook" and reaffirmed the central bank stood ready to "act as appropriate" to sustain a decade-long expansion. The comments reinforced expectations of an interest rate cut from the Fed for the first time in a decade at its monetary policy meeting later this month. Prospects of major central banks embracing looser monetary policy to counter a global growth slowdown has supported emerging markets this year.
Both pared losses after President Andres Manuel Lopez Obrador appointed deputy finance minister Arturo Herrera to replace him. Urzua resigned and posted a scathing letter on Twitter that said some policy decisions were made without "sufficient foundation." Goldman Sachs in a note to investors called the resignation "an unexpected and negative development." The Obrador administration had hoped the U.S.-trained economist would help it sell its reform agenda to skeptical international investors.
Most Latin American currencies made small moves against the dollar on Tuesday as investors awaited clues on U.S. monetary policy from the U.S. Federal Reserve officials. With financial markets closed in Brazil and Argentina for a local holidays, trading was largely muted ahead of Fed chief Jerome Powell's testimony to the Congress and release of minutes on Wednesday from the U.S. central bank's last policy meeting. Emerging markets have enjoyed capital inflows this year on signs major central banks would embrace a looser monetary policy as a result of trade disputes and growth concerns.
MSCI's index of Latin American stocks rose 0.8%, outperforming the broader emerging markets index on the back of gains among heavyweights Brazil and Mexico while currencies gained 0.5%. The Bovespa touched a record high on optimism over pension reform, while the real rose 0.4%. Brazilian House speaker Rodrigo Maia said on Saturday he expects the lower house of Congress to begin voting on the bill on Tuesday.
Regional currencies lost between 0.03% to 0.7%, with Brazil's real slipping from three-month highs hit last session, as the dollar climbed 0.5%. "It (jobs data) reduces the scope for a 50bp cut this month, though does little to alter the easing narrative linked to the Fed," strategists at TD Securities wrote in a note. Brazil's real fell 0.4% after a strong rally on Thursday spurred by the government's pension reform bill clearing a key congressional hurdle, which paved the way for it to be put to a lower house plenary vote before the parliament breaks for recess.
The dollar index, which measures the greenback against a basket of six major currencies, was up 0.5% after data showed that U.S. job growth rebounded strongly in June as government hiring surged. "The results were really encouraging and reinforced the underlying strength of the U.S. market and the U.S. economy in general, and is likely to help to temper the markets' aggressive calls for easier policy from the Federal Reserve," said Candice Bangsund, asset allocation manager at Fiera Capital in Montreal. The Brazilian real fell 0.7% after touching its strongest level in more than three months on Thursday after the government's pension reform bill cleared a key congressional hurdle.
Markets are hoping that International Monetary Fund head Lagarde will maintain the ECB's recent dovish tone, which was echoed by the U.S. Federal Reserve, and had spurred inflows into riskier assets last month. "People think that Lagarde will be more dovish," said Gustavo Rangel, chief economist, LATAM at ING, adding that general expectations of a more support from the ECB and Fed are driving the market on the day.
U.S. President Donald Trump offered concessions to China on Saturday when he met Chinese President Xi Jinping at the G20 summit, including holding off on new tariffs and easing restrictions on tech company Huawei. China agreed to make unspecified new purchases of U.S. farm products and restart negotiations. Most regional stocks rose in line with world stocks, and currencies firmed against a significantly stronger dollar, but ended off session highs.
(Updates prices) By Susan Mathew June 26 (Reuters) - Latin American stocks mostly fell and Brazil's real traded flat on Wednesday, while most other regional currencies firmed on measured optimism around the Sino-U.S. trade dispute. Against a steady dollar, most Latam currencies recovered from losses logged last session after comments by U.S. Federal Reserve officials quashed hopes of a half-point cut in interest rates. Mexico's peso firmed 0.5% after three days of losses, while Colombia's currency rose 0.1% with support from rising oil prices.
Most Latin American currencies rose on Wednesday as optimism over U.S.-China trade talks offset weakness after the U.S. Federal Reserve dampened hopes of aggressive interest rate cuts. U.S. Treasury Secretary Steven Mnuchin said on Wednesday that the United States and China were close to a trade deal, CNBC reported ahead of meeting this week between presidents Donald Trump and Xi Jinping at the G20 Summit. The news turned around weakness in Latin American assets after comments from Fed policymakers on Tuesday pushed investors to trim expectations of a half-point cut in interest rates in a policy meeting next month.
The Brazilian real edged lower for a second day, while the Mexican peso hovered near two-week lows even as the greenback touch new lows against a basket of major currencies. Minutes from the Brazilian central bank's June policy meeting showed the economy is stagnating and uncertainty surrounding economic and fiscal reforms is clouding the growth and inflation outlook. "BCB minutes emphasize that pension reform is the prerequisite for any easing," Citi analyst Dirk Willer wrote in a note.
Sentiment globally took a hit after U.S. President Donald Trump called off a military attack on Iran at the last minute. Stocks in Mexico, Chile and Colombia slipped between 0.1% and 0.6%. Among currencies, Mexico's peso slipped 0.5%, falling for the first time in four days, while Chile's currency was flat against a weaker dollar.