Most Latam FX weaken marginally; focus on US elections
Mexico's annual inflation accelerates slightly in early October
Brazil inflation picks up in mid-October
Latam stocks up 0.3%, FX up 0.4%
By Shashwat Chauhan
Oct 24 (Reuters) -Most Latin American currencies fell on Thursday, with Brazil's real leading losses as investors assessed the local inflation picture, though focus remained on the U.S. presidential election and the Federal Reserve's interest rate path.
Brazil's real BRL= dipped 0.3% in volatile trading. Data showed inflation in Brazil accelerated in the month to mid-October, as higher electricity costs pushed consumer prices up.
Future interest rate moves and the magnitude of Brazil's current monetary tightening cycle will be determined by the central bank's commitment to reaching its inflation target, director Diogo Guillen said.
Mexico's peso MXN= inched down 0.2% after rising for the last two sessions. Official data showed Mexico's annual inflation accelerated slightly in the first half of October.
Twelve-month headline inflation came in at 4.69% in early October, above the previous month's 4.66% and the 4.65% forecast by economists polled by Reuters.
Chile's peso CLP= dipped 0.2%, set to snap a three-day winning streak, while the Colombian peso COP= held firm at 4323.05 per dollar.
Latin American currencies have been under pressure recently while the dollar remained in favor globally as investors scale back expectations of large U.S. rate cuts, with a recent rise in Treasury yields reflecting that sentiment.
Traders currently see a 93% chance of the Fed opting for a 25 basis point cut in November, according to CME's FedWatch Tool.
Also adding uncertainty was the U.S. election on Nov. 5, with markets increasingly pricing in former President Donald Trump retaking the White House.
"The month of October has been positioning for a Trump clean sweep ... the market is starting to brace itself for a Trump win and what it means for protectionism," said Chris Turner, global head of markets at ING.
Trump's proposed policies on taxes and tariffs are seen as inflationary, likely keeping U.S. interest rates high and undermining the currencies of trading partners.
MSCI's index for Latin American currencies .MILA00000CUS was up 0.4%, while a gauge for stocks .MILA00000PUS added 0.3%.
Most local bourses advanced, with Argentina's Merval index .MERV rising more than 1%, leading gains.
HIGHLIGHTS
** Tight US election clouds scenario for Brazil's next interest rate decision
** Russia's proposed grain exchange for BRICS countries may take years to launch
** Pakistan requests $1 bln in IMF climate cash and sees reserves rising
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1133.83 | -0.7 |
MSCI LatAm .MILA00000PUS | 2159.94 | 0.32 |
Brazil Bovespa .BVSP | 128918.28 | -0.24 |
Mexico IPC .MXX | 51993.54 | -0.28 |
Chile IPSA .SPIPSA | 6721.31 | 0.51 |
Argentina Merval .MERV | 1806315.58 | 1.803 |
Colombia COLCAP .COLCAP | 1323.9 | 0.18 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.708 | -0.34 |
Mexico peso MXN= | 19.8608 | -0.18 |
Chile peso CLP= | 947.1 | -0.2 |
Colombia peso COP= | 4323.05 | -0.02 |
Peru sol PEN= | 3.755 | -0.05 |
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
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