July 11, 2019 / 7:35 PM / 11 days ago

EMERGING MARKETS-Latam currencies gain on Fed optimism, Brazil assets dip

 (Updates prices; adds quote)
    By Agamoni Ghosh
    July 11 (Reuters) - Latin American currencies were set to
close higher on Thursday for a sixth straight session, taking
cues from the U.S. Federal Reserve's dovish stance, while assets
in Brazil underperformed  as the euphoria over the pension
reform vote waned. 
    MSCI's Latin American currencies moved o.6%
higher in line with emerging market peers as expectations of an
interest rate cut by the Fed bodes well for developing market
assets. 
    The Mexican peso, which slid following the finance
minister's abrupt resignation on Tuesday, gained 0.3%, but
overhangs regarding the country's fiscal status kept investors
nervous. Stocks dipped 0.2%.
    All five of the Mexican central bank's board members agreed
the slowdown in Mexico's economy had been larger than
anticipated, with "signs of weakness" in the second quarter,
minutes from the June 27 monetary policy meeting showed on
Thursday.
    The Chilean and the Colombian pesos gained
between 0.3% and 0.7%, while the Peruvian sol was flat
ahead of the release of the central bank's monetary policy
decision.
    "We expect the Peruvian central bank to keep rates on hold
today and into 2020, as policymakers are likely to reiterate
their plan to maintain the current expansionary policy stance
for a prolonged period of time," Morgan Stanley analysts said in
a note.   
    The real barely managed to stay in positive
territory, while Sao Paulo-traded stocks slid 0.8%,
easing off record high levels as enthusiasm over the passage of
the pension reform bill in the lower house faded away. 
    The lower house passed the main text of the bill on
Wednesday by a far wider margin than predicted. House Speaker
Rodrigo Maia said he hoped the complete bill could be put to a
second, final vote by Friday. 
    The pension reform is the cornerstone of President Jair
Bolsonaro's economic agenda aimed at saving the public purse
around 1 trillion reais ($263 billion) over the next decade.
    Despite a slump in the Bovespa index, shares of
Petroleo Brasileiro SA gained 1.5% after Goldman
Sachs started coverage of the state-run oil company with a "buy"
rating.
    Argentina's benchmark index fell marginally, while 
the country's peso gained 0.4%.    
 
 Key Latin American stock indexes and currencies at 1915 GMT
 Stock indexes                   Latest      Daily %
                                              change
 MSCI Emerging Markets             1,055.10     0.59
                                             
 MSCI LatAm                        2,961.73     0.33
 Brazil Bovespa                  105,240.05    -0.55
 Mexico IPC                       42,746.75    -0.14
 Chile IPSA                        5,073.71     0.13
                                             
 Argentina MerVal                 42,806.64     0.11
 Colombia IGBC                    12,967.39     -0.3
                                                    
 Currencies                          Latest  Daily %
                                              change
 Brazil real                         3.7510     0.04
                                             
 Mexico peso                        19.0833     0.24
                                             
 Chile peso                           681.2     0.62
 Colombia peso                     3,196.85     0.15
 Peru sol                             3.285    -0.06
                                             
 Argentina peso (interbank)         41.6900     0.38
                                             
 

 (Reporting by Agamoni Ghosh and Sruthi Shankar in Bengaluru
Editing by Leslie Adler)
  
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