|Day's Range||5,041.52 - 5,072.83|
|52 Week Range||4,798.35 - 5,515.95|
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.
Mexico's peso hit a seven-week high before trading flat against the dollar, which posted its biggest two-day drop in a year after the Fed's policy statement on Wednesday. The Fed joined global peers such as the European Central Bank and the Reserve Bank of Australia this week in indicating that more policy stimulus is needed to maintain economic growth.
Most Latin American currencies firmed on Thursday as the U.S. dollar remained on the backfoot after the Federal Reserve boosted bets of an interest rate cut as early as next month. Emerging market assets rallied, with the MSCI's index of Latin American stocks gaining 1.3% and the region's currencies index rising over 1%. Boosting appetite for risky assets, the Fed on Wednesday signaled interest rate cuts this year, saying it is ready to battle growing global and domestic economic risks as it took stock of rising trade tensions and growing concerns about weak inflation.
(Updates prices) By Susan Mathew June 19 (Reuters) - Latin American currencies firmed on Wednesday, with Brazil's real and Mexico's peso reversing session losses to trade higher after the Federal Reserve signaled possible rate cuts of as much as half a percentage point in 2019. Brazil's real was up 0.2%, reversing losses of up to 0.6% logged earlier in the day, while Mexico's peso rose 0.1%, recovering from a decline of as much as 0.4%. Other regional currencies added to their gains. Most Latam stocks followed suit, with Sao Paulo-traded shares erasing losses to trade 0.8% higher, while gains in Mexican and Colombian stocks were bolstered.
ECB President Mario Draghi said the bank will need to ease policy again, possibly through new rate cuts or asset purchases, if inflation doesn't head back to its target. "EM assets have bounced on the dovish ECB," said strategists at Morgan Stanley. "Perhaps markets believe that the ECB moves will reactivate the euro-funded carry trade, and that this would be enough for EM to keep strengthening versus the dollar, despite a weak euro-dollar pair," they said, cautioning however that any additional dollar strength could weigh on EM currencies.
Lower U.S. interest rate boost the relative attractiveness of developing world assets, usually spurring broad inflows into emerging markets. The Federal Reserve is expected to leave borrowing costs unchanged at the end of its two-day meeting on Wednesday but possibly signal a rate cut this year. "The meeting is all about providing the markets with sufficient reassurance that the next move will be a cut, most likely in July," wrote Piotr Matys, an emerging markets FX strategist at Rabobank.
The real fell 1% to 3.89 per dollar after Brazil's Economy Minister Paulo Guedes expressed his disappointment with a congressional committee's report on pension reform, saying it made more changes to the government's original proposals than he had expected. "It's (Guedes' comments) making investors nervous and leading to some weakness in the real," said Alejo Czerwonko, emerging markets strategist at UBS Global Wealth Management.
The real fell 0.8% to 3.88 per dollar level as the government's proposals to raise the minimum retirement age and workers' contributions to help restore public finances are drawing fierce opposition and look likely to fall short of what President Jair Bolsonaro's government was seeking.
The real rose about 0.4% while Sao Paulo-listed stocks also gained 0.4% to touch a near three-month high after Brazil's congressional pension reform bill coordinator Samuel Moreira said the proposed changes would generate savings of 913.4 billion reais ($237 billion) over the next decade. "All indications suggest that pension reform remains on track and may leave the committee with greater savings than the consensus expected," Dirk Willer, head of emerging market strategy at Citi Research, and Kenneth Lam, an emerging markets FX strategist, wrote in a note. The Argentine peso advanced for a third day in a sign of approval from markets after President Mauricio Macri picked a moderate running mate that could broaden his voter base in elections to be held later this year.
Latin American currencies firmed against a steady dollar on Tuesday with Mexico's peso extending gains logged after U.S. President Donald Trump called off punitive tariffs on Mexican goods, while Brazil's real looked set to reverse last session's losses. Trump said he was ready to impose another round of tariffs on Chinese imports if no progress is made in trade talks with Chinese President Xi Jinping at the G20 summit later this month. Mexico's peso firmed 0.3% after logging its best day in almost a year on Monday on news that Mexico and United States had struck a migration deal that averted U.S. tariffs of an initial 5% that were set to take effect this week.
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