Latam FX muted, Chile’s peso snaps 6-day winning streak

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Most Latin American currencies moved

little on Monday, with Chile’s peso breaking a six-day winning

streak as the dollar regained momentum, while Brazil’s real rose

slightly.

The dollar lifted off one-month lows as weak data from

around the globe last week spurred worries over slowing global

growth.

“Recent U.S. data points to some moderation in growth

rebound momentum and this reinforces our bias for the Fed to be

patient in its pace of policy normalization,” said currency

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strategists at Maybank.

“But global growth concerns could still induce some

intermittent buy-on-dips for the dollar.”

Chile’s peso fell 0.8% after gaining 2.7% over the

last six sessions. Minera Lumina Copper said it had reached a

deal with workers at its Caserones mine in Chile, ending an

almost month-long strike. Prices of copper, Chile’s biggest

export, inched higher.

Brazil’s real rose 0.2% as investors awaited

inflation data later this week, which is likely to factor into

central bank rate hikes this year.

Brazilian Economy Minister Paulo Guedes said on Friday that

inflation had reached its worst point, with 12-month inflation

currently near 9%, and that he expected it to fall gradually to

near 7% by year’s end.

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Interest rate hikes by the central bank to control inflation

had helped the currency find some support amid rising political

uncertainty, which had cost the real its place as the best-

performing emerging market currency this year.

Mexico’s peso rose 0.1%, extending gains to a seventh

straight session and staying close to three-week highs. Carry

trade, in which investors borrow in a low-yielding currency to

invest in higher-yielding assets, has helped the currency stay

afloat and often outperform regional peers this year.

The peso is the only Latam currency in positive territory

for the year, albeit marginally.

Data on Monday showed Mexican gross fixed investment fell

1.8% in June from the previous month.

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With volume expected to be low due to a U.S. market holiday

on Monday, regional stocks fell slightly.

Iron ore miner Vale and steel makers Usiminas

and Companhia Siderurgica Nacional led

losses on Brazil’s Bovespa as steel-making ingredient

prices tumbled to seven-month lows on rising China inventories.

Falling oil prices weighed on oil major Petrobras

, on course to post its sixth straight session of

losses in what could be its longest losing streak in almost two

years.

Key Latin American stock indexes and currencies:

Latest Daily % change

MSCI Emerging Markets 1324.11 0.62

MSCI LatAm 2471.68 0.39

Brazil Bovespa 117641.27 0.61

Mexico IPC 52148.56 0.6

Chile IPSA 4452.14 -0.26

Argentina MerVal 75915.31 1.579

Colombia COLCAP 1322.32 -0.39

Currencies Latest Daily % change

Brazil real 5.1720 0.22

Mexico peso 19.8895 0.13

Chile peso 771.89 -0.76

Colombia peso 3797.53 0.00

Peru sol 4.0981 -0.40

Argentina peso 97.9400 -0.06

(interbank)

(Reporting by Susan Mathew in Bengaluru; Editing by Matthew

Lewis and Dan Grebler)

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