EMERGING MARKETS-Latam currencies sink on strong U.S. service sector data

miércoles 5 de agosto de 2015 11:53 GYT

SAO PAULO, Aug 5 (Reuters) - Latin American currencies
dropped on Wednesday on expectations for a September increase in
U.S. interest rates after strong service sector data offset
weaker jobs numbers in the world's largest economy.
    Equities were mostly higher as mining company Vale SA
 helped the Bovespa stock index nearly erase
losses from the previous two sessions.
    U.S. private job growth slowed sharply in July, according to
the ADP National Employment Report released early on Wednesday.
Later in the session, data from the Institute for Supply
Management showed the pace of growth in the U.S. service sector
accelerated in July to its fastest in a decade, reinforcing
expectations that the U.S. Federal Reserve would hike interest
rates in September.  
    "There's no doubt that the Fed won't wait to hike rates,"
said Reginaldo Galhardo, head of currency trading at brokerage
Treviso in Sao Paulo.
    Higher U.S. interest rates are expected to draw funds away
from riskier emerging markets such as Colombia, Mexico and
    Brazil's real  weakened to 3.4999 per dollar but
failed to break the 3.50 psychological barrier. Still, the
currency is at its weakest since March 2003 because of economic
deterioration, lower commodities prices and the U.S. rate
    Political turbulence is also sinking the real, with traders
monitoring news of a massive corruption investigation engulfing
state-run oil producer Petroleo Brasileiro SA, which
is known as Petrobras. 
    The deepening investigation could make it more difficult for
the government to achieve the necessary political backing to
reach its fiscal goals and get the shrinking economy back on
track, traders said.
    Other currencies in the region fell on declining prices for
commodities. Lower oil prices weighed on Colombia's peso,
while a drop in copper prices dragged on Chile's peso.
    "Between (U.S. rate hikes) and lower commodity prices,
emerging market currencies will have trouble finding much
traction, and so we remain bearish," BBH analysts wrote on
    In equities markets, Brazil's Bovespa index gained about 1
percent, led by a 4 percent gain in Vale shares after the
company slightly reduced the size of its 2015 investment plan.
    Vale shares also climbed on a 2.5 percent rise in the price
of iron ore .IO62-CNI=SI, its main product.
    Key Latin American stock indexes and currencies at 1527 GMT:
 Stock indexes                        daily %    YTD %
                             Latest    change   change
 MSCI Emerging Markets        891.87    -0.14    -6.61
 MSCI LatAm                  2252.46    -0.44   -17.06
 Brazil Bovespa           50547.2469     0.98     1.08
 Mexico IPC                  45169.9    -0.02     4.69
 Chile IPSA                  3867.14     0.44     0.42
 Chile IGPA                 18827.47     0.41    -0.23
 Argentina MerVal          10917.909     1.01    27.26
 Colombia IGBC               9921.43     0.14   -14.73
 Venezuela IBC              15429.68     0.95   299.86
 Currencies                           daily %    YTD %
                                       change   change
 Brazil real                  3.4890    -0.77   -23.83
 Mexico peso                  16.361    -0.38    -9.88
 Chile peso                    683.1    -0.71   -11.23
 Colombia peso                  2948    -0.85   -19.00
 Peru sol                     3.2011    -0.37    -6.94
 Argentina peso               9.2025    -0.03    -7.09
 Argentina peso                   15    -0.67    -6.67
 (Reporting by Bruno Federowski and Asher Levine; Editing by
Lisa Von Ahn)