October 31, 2019 / 2:12 PM / 15 days ago

EMERGING MARKETS-Brazil FX up on less dovish cen bank, Colombia rate decision awaited

    By Susan Mathew
    Oct 31 (Reuters) - Brazil's real currency scaled 11-week
peaks on Thursday as the country's central bank sounded less
dovish about future rate cuts, while most other Latin American
currencies inched higher against a dollar in the doldrums.
    The dollar fell 0.4% against a basket of six major rivals
 after the U.S. Federal Reserve cut interest rates as
expected and signalled additional trims are unlikely, but the
lack of an explicit signal that the bank is done with easing for
now was perceived to be less hawkish than expected.
    "By suggesting that markets should not reprice the path of
monetary policy much even if inflation were to start moving
higher would suggest a more prolonged period of lower real
rates, which ought to be bearish for USD," Morgan Stanley
analysts said in a note. 
    Colombia's peso rose for a fourth session in five,
while Brazil's real rose as much as 0.7%.
    Brazil's central bank cut the benchmark interest rate to a
new all-time low of 5.00% as expected on Wednesday, but signaled
that further easing may be less aggressive than it has been in
recent months, despite inflation running well below target.

    Mexico's peso slipped 0.2% a day after data showed
the economy crawled forward in the third quarter from the
previous three-month period, falling short of forecasts and
prolonging its tepid start under President Andres Manuel Lopez
Obrador.
    "The market took this data as indicating that the likelihood
of a 50 basis point cut in the upcoming Banxico meeting must be
increasing, as front end rates kept falling," analysts at
Citigroup said. 
    "But with the Fed also signaling a pause, we doubt that
Banxico is currently in the mindset of a 50bp cut, even though
there is a clear willingness to cut more than the Fed," they
said.
    Later in the day, Colombia's central bank is expected to
stand pat on rates at its meeting. Any potential comments on a
recent court decision to scrap the 2018 tax reform and a
timeline for the administration to replace it, will be watched
for.
    Among stocks, Sao Paulo listed shares fell 1%, in
line with a move lower in U.S. stocks, on fresh trade
uncertainty after a report said Chinese officials have doubts on
the possibility of reaching a comprehensive long-term trade deal
with Washington.
    Brazil's second largest private-sector lender Banco Bradesco
 was the biggest weight on the main index. The
firm met estimates on quarterly net income, but reported a rise
in loan arrears and loan loss provisions. 
    Airline Gol slipped after reporting a quarterly
loss hit by problems affecting its Boeing 737 planes. 

    
    Key Latin American stock indexes and currencies at 1333 GMT:
   Stock indexes            Latest    Daily %
                                      change
 MSCI Emerging Markets       1042.90     0.13
                                      
 MSCI LatAm                  2793.08    -0.29
                                      
 Brazil Bovespa            107310.23    -1.01
                                      
 Mexico IPC                        -        -
                                      
 Chile IPSA                        -        -
                                      
 Argentina MerVal                  -        -
                                      
 Colombia IGBC                     -        -
                                      
                                             
       Currencies           Latest    Daily %
                                      change
 Brazil real                  3.9913     0.02
                                      
 Mexico peso                 19.1211    -0.21
                                      
 Chile peso                        -        -
                                      
 Colombia peso               3374.08     0.39
 Peru sol                          -        -
                                      
 Argentina peso              59.4500     0.44
 (interbank)                          
                                      
 
 (Reporting by Susan Mathew in Bengaluru;
Editing by Chizu Nomiyama)
  
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