June 27, 2019 / 8:12 PM / 3 months ago

EMERGING MARKETS-Most Latam FX fall, Brazil's real firms

 (Updates prices)
    By Susan Mathew
    June 27 (Reuters) - Most Latin American currencies dipped on
Thursday as news flow from the White House dampened optimism
around a China-U.S. trade deal, while Brazil's real reversed
course to trade higher.
    Currencies of Colombia, Chile and Argentina
 fell between 0.07% and 0.3% against a dollar that held
steady as traders moved to the sidelines ahead of this weekend's
G20 summit when leaders of China and United States are to meet
to discuss trade.
    U.S. President Donald Trump's decision on whether to impose
a new round of tariffs on Chinese goods is contingent on the
outcome of his meeting with Chinese President Xi Jinping, a
senior Trump administration official said on Thursday.

    He added it was unlikely that the United States would agree
to lift sanctions imposed on Chinese telecom equipment maker
Huawei Technologies Co Ltd         
    Mexico's peso was 0.2% lower. The Bank of Mexico kept
rates unchanged on Thursday, as expected, and said the balance
of risks for growth has become more uncertain.
    Christian Lawrence, a senior market strategist at Rabobank,
said that while there has been a gradual rise in dovish-ness
over the last three meetings, this meeting's message has been
the most dovish so far.
    "I would say that the door is now open for rate cuts," he
said. 
    "I personally don't think they are going to cut rates until
the fourth quarter, but that will be dependent on the Fed
decision in July. If the Fed says it's going to start an easing
cycle immediately then Banxico may end up cutting rates sooner."
    The peso steepened losses slightly right after the central
bank announcement, but moved back to levels before the rate
decision. It later deepened losses as the session progressed.
    Mexican stocks slid 1.1% with shares of energy
infrastructure firm IEnova declining the most, down
6.2%, on pipeline contract concerns.
    Brazil's real rose 0.5%, recovering from a week's low
hit earlier in the session, on reassurances on economic growth
and pension reforms.
    Brazil's economy should recover in the second quarter of
this year, central bank president Roberto Campos Neto said, but
he said it was contingent on the approval of pension reforms.

    The bank had slashed its 2019 economic growth forecast
earlier in the day.
    On the pension reform front, special congressional pension
coordinator Samuel Moreira said there is still time to vote on
the reform this month, even after a committee meeting to decide
on a final version of the bill before sending it to the lower
house plenary was canceled on Thursday.
    Sao Paulo traded stocks cut losses to trade flat.
    Shares in Colombia rose 0.2%, while those in
Argentina jumped 3% to hover near all-time highs. 
    
    Key Latin American stock indexes and currencies at 1940 GMT:
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets        1,055.61      0.73
                                        
 MSCI LatAm                   2,839.60     -0.13
                                        
 Brazil Bovespa             100,492.47     -0.19
                                        
 Mexico IPC                  43,305.14     -1.11
                                        
 Chile IPSA                   5,053.20      -0.6
                                        
 Argentina MerVal            41,122.23      3.02
                                        
 Colombia IGBC               12,630.22       0.2
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    3.8277      0.49
                                        
 Mexico peso                   19.1618     -0.18
                                        
 Chile peso                      679.4     -0.07
                                        
 Colombia peso                3,196.15     -0.47
 Peru sol                        3.289      0.12
                                        
 Argentina peso                42.6800      0.12
 (interbank)                            
                                        
 
 (Reporting by Susan Mathew in Bengaluru; editing by Grant
McCool)
  
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