MSCI’s index tracking Latin American currencies .MILA00000CUS dipped 0.1%, as the dollar see-sawed between marginal gains and losses after an in-line U.S. inflation report underscored the likelihood of an interest rate cut by the Federal Reserve in December.
The greenback was close to a six-month high as markets priced in higher interest rates under an upcoming Donald Trump administration, whose fiscal, trade and immigration polices are seen as inflationary by analysts.
The Mexican Peso MXN= gave up marginal gains and was last flat at 20 to the dollar. The currency has declined over 17% this year as a controversial judicial overhaul, uncertainty around Trump’s policies against the country and unsustainable public spending hurt appetite for the peso.
Investors are also anticipating a 25 basis-point interest rate cut, along with the unveiling of the 2025 budget, both slated for Thursday.
President Claudia Sheinbaum announced a plan to simplify the fiscal regime for state oil firm Petroleos Mexicanos, in effort to boost the producer whose heavy debts have weighed on state coffers.
Copper exporter Peru’s sol PEN= dipped 0.3%, tracking weak prices of the red metal. The country is also hosting the Asia-Pacific Economic Cooperation (APEC) forum that starts today through November 15.
Although the formal agenda centers on financing energy transition, discussions are likely to pivot towards the implications of a potential Trump 2.0 presidency.
“Leaders have to be very aware of the fact that if they’re not going to cooperate with the United States, there is always going to be economic pressure. But at the same time it also serves as a way for them to look at what possibilities (for cooperation) they have,” Juan Perez, director of trading at Monex said.
Meanwhile, the Brazilian real BRL= weakened 0.6%. The local central bank postponed $4 billion in two dollar auctions with repurchase agreements after an operational issues hampered the scheduled sale on Wednesday.
Separately, data revealed stronger-than-expected growth in services activity in September, further bolstering the case for upcoming interest rate hikes by the domestic central bank.
Fellow copper producer Chile’s peso CLP= inched up after three sessions of declines, while oil exporter Colombia’s peso COP= depreciated 1.2% as crude prices dipped. O/R
On the stocks front, an index .MILA00000PUS tracking bourses in the region dropped 0.6%, with heavy-weight Brazilian equities .BVSP losing 0.4%.
Mexican stocks .MXX lost 0.2% and was set to mark its fourth day in the red, while Colombia’s Colcap index .COLCAP crept up 0.1%.
Colombia’s Ecopetrol ECO.CN fell 1.2% ahead of quarterly results.
