EMERGING MARKETS-Latam FX gains on dovish U.S. outlook; Mexican awaited

    * Colombian peso outpaces regional peers
    * Brazil's real lags on weak data
    * Mexican expected to cut rates

    By Ambar Warrick
    Feb 11 (Reuters) - Latin American currencies hit a
three-week high on Thursday as a dovish U.S. economic outlook
bolstered risk-driven assets, while Mexico's peso hit a near
three-week high ahead of a central bank meeting later in the
    Colombia's peso led gains across the region with a
1.1% rise, while MSCI's index of Latam currencies
 hit its highest level in three weeks.
    Strength in oil prices supported the currencies of exporters
Colombia and Mexico.
    Mexico's peso rose 0.4%, with analysts expecting the
Mexican central bank to cut rates in order to push up inflation.
    The bank had paused a cutting cycle late last-year after a
temporary spike in inflation. But with core prices remaining
low, it is expected to trim interest rates further to 4.0%.
    "Inflationary pressures have declined, which should make the
bank’s board comfortable about resuming the easing cycle,"
Credit Suisse analysts wrote in a note.
    "Other factors supporting our view include the stability of
the Mexican peso and the apparent reduction in the likelihood
that Congress may force the central bank to become a buyer of
last resort of foreign bills and coins from commercial banks in
    The country's ruling party had last week sidelined a bill
that would require the central bank to buy up cash that
commercial lenders cannot offload, which had sparked criticism
that it could force the bank to absorb the proceeds of organized
    The U.S. dollar and Treasury yields retreated after benign
U.S. inflation and dovish indications from the Federal Reserve
pointed to policy staying accommodative in the near-term. This
in turn pushed investors into higher-yielding emerging market
    Chile's peso hit a three-week high on continued
strength in copper prices.
    But Brazil's real lagged its peers for a second day,
as data showed services activity in the country unexpectedly
fell in December due to a second wave of COVID-19 cases.

    Concerns over stretched fiscal spending have hurt the real,
despite the prospect of quicker-than-expected rate hikes by the
central bank. 
    Brazil's central bank president Roberto Campos Neto also
warned that an economic recovery in Latam's largest economy was
losing steam.
    Bets on more U.S. stimulus and steady vaccine rollouts have
driven investors into riskier assets such as EM equities
, which hit a record high on Thursday. But Latam stocks
, which rose in early trade, have lagged their
peers through 2020.

    Key Latin American stock indexes and currencies:
                              Latest      Daily % change
 MSCI Emerging Markets         1428.09                 0.36
 MSCI LatAm                    2427.24                 1.14
 Brazil Bovespa              119671.71                 1.04
 Mexico IPC                          -                    -
 Chile IPSA                    4525.60                -0.05
 Argentina MerVal             52313.37                0.717
 Colombia COLCAP               1374.20                    - Currencies             Latest      Daily % change
 Brazil real                    5.3665                 0.04
 Mexico peso                   19.9406                 0.40
 Chile peso                      722.2                 0.51
 Colombia peso                  3520.6                 1.06
 Peru sol                       3.6347                 0.06
 Argentina peso                88.4400                -0.08

 (Reporting by Ambar Warrick in Bengaluru; Editing by Andrea