Market News

By Ankika Biswas

        *       Chile, Mexico meeting minutes expected 

        *       EMFX to hold gains into 2024 if cbanks hold rates- Poll
    

        *       Improving economic outlook to support Brazil real- Poll
    

        *       Argentina to hold rate at 97%- sources
    

        *       Latam FX down 1%, stocks slide 2.4%
    

  
    By Ankika Biswas
       July 6 (Reuters) - Latin American currencies hit a
three-week low on Thursday as the prospect of U.S. interest
rates staying higher for longer steered traders away from risk
assets, and the focus turned towards central bank meeting
minutes from Mexico and Chile.
    The MSCI index for Latam currencies dropped
1%, set for its steepest three-day percentage decline since
mid-March, with intensifying U.S.-China tensions also weighing.
    Data signaling a resilient U.S. labor market and hawkish
Federal Reserve meeting minutes increased expectations that the
high rate regime in the world's largest economy may persist for
longer. 
    Chile's peso and Mexico's peso shed over 1%
each ahead of their June meeting minutes due to be published on
Thursday.
    Chile's central bank kept its benchmark rate unchanged and
noted the possibility of rate cuts in the short term, while the
Bank of Mexico also maintained its rate and said it was likely
to hold it "for an extended period" as inflation remains above
target.
    Goldman Sachs analysts will be watchful of what led two
Chile central bank directors to vote in favor of the cutting
cycle starting in June, while they expect Mexico's minutes to
widely acknowledge progress on disinflation, resilient domestic
economic activity and a strong labor market.
    A Reuters poll showed emerging market currencies were likely
to hold gains into next year provided their respective central
banks maintain or only moderately prune rates that have boosted
carry trades.
    Weak copper prices also punished top producer Chile's peso
and second-largest producer Peru's sol.
    Top crude oil exporter Colombia's peso and the
Mexican peso were also hurt by lower prices of the commodity.

    Brazil's real lost 1% on Thursday, with a
Reuters poll revealing that it is likely to receive near-term
support from expectations of stronger economic growth and
economic reforms, despite the likelihood of less favorable
interest rate differentials ahead. 
    Reuters reported Argentina's central bank is set to hold its
benchmark rate steady at 97% in the near term on optimism that
monthly inflation will slowly ease, providing a boost for the
government ahead of primary elections next month.
    The Argentinian peso was up 1% in black market
trading.
    The MSCI index for Latam stocks slid 2.4% to
the lowest in nearly a month, dragged by an over 1% decline each
in the benchmark indexes of Brazil and Argentina
.
    Shares of Brazilian homebuilder MRV fell 3% after
it filed for a follow-on share offering, initially looking to
sell 58.64 million new shares.
    Meanwhile, Wall Street bank Citi found in its quarterly
survey that investors in emerging market hard-currency bonds are
taking a glum view on China going into the third quarter owing
to skepticism around stimulus talks.
    Mexico was able to maintain its position as the most popular
OW (overweight), followed by Brazil and Colombia, the survey
showed.