EMERGING MARKETS-Emerging currencies up after U.S. data; Latam stocks sink
By Asher Levine and Natsuko Waki
RIO DE JANEIRO/LONDON Feb 13 (Reuters) - Concerns over economic growth, corporate earnings and inflation drove Latin American stocks lower on Thursday, although most emerging market currencies gained against the dollar following disappointing U.S. retail data.
Yields on 10-year and 30-year U.S. bonds retreated from recent peaks, relieving pressure on South Africa's rand, the Turkish lira and the Hungarian forint, some of the worst-hit currencies in the sell-off that began last month. Nigeria's currency also rebounded after a central bank intervention.
U.S. retail sales fell unexpectedly in January, signaling slowing economic growth and raising the outlook among some investors for a slower reduction in the Federal Reserve's monetary stimulus program.
While some traders attributed the afternoon's broad strengthening of emerging market currencies to the weak figures, others saw a technical correction after recent losses, considering the impact of inclement weather on the U.S. data.
"A weak quarter, especially one for which the data is not particularly clean, will not alter the Fed's medium-term views of the underlying economy or the risk-reward of (monetary stimulus)," wrote Brown Brothers Harriman analysts in a note.
All of Latin America's major currencies strengthened against the dollar, with Brazil's real up over 1 percent and Mexico's peso rising 0.2 percent. Chile's peso also gained as companies, mostly mining firms, sold dollars on the local market.
The region's stocks fared worse, with MSCI's Latin American stock index down 0.3 percent. Continuación...