October 15, 2019 / 2:21 PM / 8 months ago

EMERGING MARKETS-Latam FX weaken as dollar gains momentum

    By Susan Mathew
    Oct 15 (Reuters) - Most Latin American currencies weakened
on Tuesday as the dollar gained momentum on fading optimism over
the latest China-U.S. trade truce, with Brazil's real touching a
two-week low. 
    Reports of a "Phase 1" trade deal between the United States
and China last week had earlier cheered markets but the dearth
of details around the agreement has since curbed this enthusiasm
with oil prices extending declines.
    "It's a pause in the trade wars, but risk markets need a
reversal of existing tariffs and a signal that the December ones
will get scrapped," wrote Mark McCormick, global head of FX
strategy at TD Securities.
    MSCI's index of Latam currencies fell 0.4%,
with Brazil real losing 0.5%, while Chile's currency
 weakened 0.4% against a firmer dollar. Coming back after
a day's holiday, Colombia's peso lost around half a
    Mexico's peso traded slight higher, looking to extend
gains to a fifth day.
    Mexico's federal government is trying to counter an economic
slowdown with targeted infrastructure spending, finance minister
 Arturo Herrera said, adding that a tax reform could be expected
in the second half of the President's term. 
    President Andres Manuel Lopez Obrador took office in
December last year. 
    Analysts at Citigroup say the Mexican and Chilean pesos have
benefited from hedge fund buying over the last few weeks. They
added that a study of leveraged flows shows the MXN is the most
attractive Latam currency.
    Stocks in the region were steady. 
    In Brazil, a 1.6% rise in meat processor JBS,
were countered by losses in Homebuilder MRV Engenharia
 and miner Vale following target price cuts
from brokerages.
    Key Latin American stock indexes and currencies at 1410 GMT:
   Stock indexes            Latest    Daily %
 MSCI Emerging Markets       1017.12    -0.03
 MSCI LatAm                  2691.20    -0.51
 Brazil Bovespa            104194.29    -0.04
 Mexico IPC                 43283.25    -0.04
 Chile IPSA                  5132.48     0.02
 Argentina MerVal                  -        -
 Colombia IGBC              12948.09        0
       Currencies           Latest    Daily %
 Brazil real                  4.1482    -0.52
 Mexico peso                 19.2611     0.03
 Chile peso                   715.25    -0.43
 Colombia peso               3446.45    -0.60
 Peru sol                     3.3718    -0.14
 Argentina peso                    -        -
 (Reporting by Susan Mathew in Bengaluru;
Editing by Nick Zieminski)
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