Global growth worries weigh on LatAm FX; Mexican peso falls after judicial reform passes
Mexican lower house passes controversial judicial reform
Brazil's industrial output falls more than expected in July
Chile cenbank trims growth estimates
Latam stocks up 0.1%, FX down 0.3%
Updated at 2000 GMT
By Shashwat Chauhan and Lisa Pauline Mattackal
Sept 4 (Reuters) - Most LatinAmerican currencies reversed gains on Wednesday as lackluster U.S. economic data increased demand for safe-haven assets and weighed on commodity prices, while Mexico's peso lost ground after Congressional approval of a controversial judicial reform bill.
Data showedU.S. job openings dropped to a 3-1/2-year low in July, suggesting the labor market was losing steam while earlier data pointed to slowingservices sector activity in China, raising concerns about growth and demand in the world's two largest economies.
MSCI's index for Latin American currencies .MILA00000CUS lost 0.3%, reversing gains from earlier in the day.
Meanwhile, Mexico'speso MXN= dropped 0.8% against the dollar afterits lower house of Congress approved a controversial judicial reform which has unnerved investors over the past several weeks.
"If enacted, Mexico's judicial reform is likely to curtail survey-based GDP (gross domestic product) growth projections even further, in furtherance of a manufacturing slowdown already in the data," said Thierry Wizman, Global FX & Rates strategist at Macquarie.
"The prevailing uncertainty will prevent MXN appreciation, even if Banxico fails to cut the policy rate again in September."
The reforms now pass to the Senate, where debate is expected to start next week. Political uncertainties have compounded concerns for Mexico's peso, with the dollar strengthening over 7% against the currency since the start of August.
Declines in commodity prices on global demand worries also weighed on the currencies of resource-rich Latin America, offsetting optimism around likely interest rate cuts from the U.S. Federal Reserve this month that would likely weaken the dollar and lift appetite for riskier emerging markets.
Chile's peso CLP= dipped 1.6% and Peru's sol PEN=PE fell 0.3% as prices of copper, a top export for both countries, hit a three-week low.
Chile'scentral bank lowered itsgrowth estimates for 2024 while raising projections for headline inflation.
Brazil's real BRL= was little changed against the dollar. Governmentstatistics agency IBGE said Brazil's industrial production fell more than expected in July, losing steam after a stellar performance in the previous month.
Investors will watchFriday's U.S. Augustnon-farm payrolls report for moreclues on the Federal Reserve's September rate cut plans and the labor market's trajectory.
Stocks in the region fared somewhat better, with MSCI's gauge of Latin American equities .MILA00000PUS gaining 0.1%.
Regional heavyweight Brazil's Bovespa stock index .BVSP gained 1.6% after falling for the last four sessions, while Mexico's benchmark .MXX added 0.5%.
That bucked the trend in broader emerging markets, with agauge of global emergingmarket stocks .MSCIEF fell 1.5%as chips-heavy bourses in Asia clocked steep losses following U.S. firm Nvidia's sharp drop on Tuesday.
HIGHLIGHTS
**Debt woes and funding needs in focus as China hosts African leaders
** Brazil finance minister says he trusts central bank officials ahead of rate decision
** Colombia's Ecopetrol says operations affected by pipeline attacks, road blockades
Key Latin American stock indexes and currencies:
MSCI Emerging Markets .MSCIEF | 1074.15 | -1.47 |
MSCI LatAm .MILA00000PUS | 2215.35 | 0.14 |
Brazil Bovespa .BVSP | 136461.87 | 1.57 |
Mexico IPC .MXX | 51819.27 | 0.45 |
Chile IPSA .SPIPSA | 6388.9 | 0.03 |
Argentina Merval .MERV | 1794002.41 | 3.386 |
Colombia COLCAP .COLCAP | 1336.16 | -0.87 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.6417 | 0.07 |
Mexico peso MXN= | 19.9345 | -0.76 |
Chile peso CLP= | 943.11 | -1.55 |
Colombia peso COP= | 4177.5 | 0.14 |
Peru sol PEN= | 3.7817 | -0.25 |
Argentina peso (interbank) ARS=RASL | 953 | 0.104931794 |
Argentina peso (parallel) ARSB= | 1285 | 1.945525292 |
Reporting by Shashwat Chauhan and Lisa Mattackal in Bengaluru
Editing by Marguerita Choy
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