April 30, 2019 / 9:39 PM / 3 months ago

EMERGING MARKETS-Latam FX firm as dollar eases with eye on Fed, Venezuela

 (NOTE: There will be no Latam-focused emerging market report on
May 1 as most regional markets will be closed on account of the
Labor Day holiday. Reuters will resume coverage on Thursday, May
2.)
    By Susan Mathew
    April 30 (Reuters) - Latin American currencies firmed on
Tuesday as the dollar lost ground a day ahead of the outcome of
U.S. Federal Reserve's two-day scheduled meeting as well as
civil unrest in Venezuela.
    Analysts expect no policy changes coming out of the U.S.
central bank's policy meeting, but investors want to hear how
Fed Chairman Jerome Powell resolves the divergence between solid
economic growth and slowing inflation. 
    "Risks are skewed to a more dovish reaction, however, should
Powell's remarks suggest the potential for rate cuts this year,"
analysts at TD Securities wrote in a note to clients.
    Global oil prices rose after Venezuelan opposition leader
Juan Guaido called for military backing to end President Nicolas
Maduro's rule, but pared gains after the government said the
state-run oil company's operations were not disrupted and top
military leaders remained loyal.
    Latin American currencies firmed between 0.27% and 0.6% as
the dollar fell, also hurt by the euro's strength.
    Brazil's real rose 0.6% on the day and inched higher
in April - a month in which uncertainty regarding the pace and
progress of pension reforms, seen as key to controlling the
country's primary deficit, intensified.
    The average estimate in a Morgan Stanley client poll showed
investors reduced the amount of expected savings over the next
decade from Brazil's social security reform to 620 billion
reais, even as the government strives to keep the target at 1.2
trillion reais.
     The Mexican peso's 0.3% gain contributed to its 2.5%
rise on the month after two straight months of losses.
    Investors seemed eager to capitalize on the dollar's
weakness as they looked past preliminary data showing Mexico's
economy contracted in the January-March period compared with the
previous three months.
    Argentina's peso currency extended losses to a
third straight month. The central bank on Monday said it may
start selling dollars below the threshold of 51.448 pesos
apiece, set in October, in an attempt to control the currency's
volatility.
    "New measures to reduce the Argentine peso's volatility
should have a positive although limited impact as the size of
reserves would not allow for much depletion without worrying
investors further," warn Morgan Stanley analysts.
    Stock markets in the region ended mixed as the Wall Street
benchmark S&P 500 index eked out another record closing high.

    Brazil shares ended 0.17% higher with retailer
Magazine Luiza SA being the top gainer after it
agreed to buy online shoe retailer Netshoes Ltd for
approximately $62 million.
    Mexican stocks, however, fell 0.8% as telecoms firm
America Movil fell after first-quarter revenue dipped,
while lender Grupo Financiero Banorte slipped
after a 47% jump in quarterly net profit failed to cheer
investors sufficiently.
    
    Key Latin American stock indexes and currencies at 2100 GMT:
   
      Stock indexes          Latest     Daily %
                                         change
 MSCI Emerging Markets        1,079.24     -0.34
                                        
 MSCI LatAm                   2,748.79     -0.46
                                        
 Brazil Bovespa              96,353.33      0.17
 Mexico IPC                  44,597.32      -0.8
 Chile IPSA                   5,187.10      0.33
 Argentina MerVal            29,571.36      2.58
 Colombia IGBC               12,777.89     -0.74
                                        
                                                
        Currencies           Latest     Daily %
                                         change
 Brazil real                    3.9207      0.55
 Mexico peso                   18.9402     0.314
 Chile peso                      676.6      0.43
 Colombia peso                3,231.25      0.52
 Peru sol                        3.306      0.12
 Argentina peso                44.1500      0.50
 (interbank)                            
 

 (Reporting by Susan Mathew in Bengaluru; , editing by G Crosse)
  
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