August 27, 2018 / 3:40 PM / 10 months ago

EMERGING MARKETS-Mexico peso extends gains on news of U.S.-Mexico trade deal

    By Bruno Federowski
    BRASILIA, Aug 27 (Reuters) - The Mexican peso jumped on
Monday after the United States and Mexico reached a deal that
could replace NAFTA, boosting hopes of a swift end to thorny
negotiations that dragged on for much longer than originally
    The peso strengthened 1.2 percent, leading gains
among Latin American currencies.
    Mexico and the United States on Monday reached an agreement
on bilateral issues in the renegotiation of the North American
Free Trade Agreement, opening the door for Canada to return to
the talks.
    Separately, Mexican President Enrique Peña Nieto said on
Twitter that he had spoken with Canadian Prime Minister Justin
Trudeau on the importance of Canada rejoining the NAFTA trade
talks with the aim of concluding the year-long trilateral
negotiation this week.
    The report added fuel to the peso's rally, driving it to
lead gains in the region. Emerging market currencies in general
strengthened for a second trading day, supported by a speech by
Federal Reserve Chair Jerome Powell suggesting a slow pace of
U.S. interest rate hikes.
    At a symposium in Jackson Hole, Wyoming, Powell on Friday
emphasized the central bank's push to raise interest rates
despite President Donald Trump's criticism of higher borrowing
costs. But he also said the Fed sees no clear sign of inflation
accelerating above 2 percent.
    Powell's comments did little to change market expectations
for rate hikes in September and December and disappointed some
dollar bulls hoping for a more hawkish message.
    Key Latin American stock indexes and currencies at 1520 GMT:
 Stock indexes                              daily %   YTD %
                                             change  change
 MSCI Emerging Markets             1050.19     0.19   -9.35
 MSCI LatAm                        2491.17     0.42  -11.92
 Brazil Bovespa                   77382.98     1.47    1.28
 Mexico IPC                       50310.83     1.36    1.94
 Chile IPSA                        5289.15     0.56    0.56
 Argentina MerVal                 25706.74     2.14  -14.50
 Colombia IGBC                    12152.60    -0.27    6.88
 Currencies                                 daily %   YTD %
                                             change  change
 Brazil real                        4.0653     0.94  -18.50
 Mexico peso                       18.6579     1.24    5.58
 Chile peso                          656.1     0.59   -6.32
 Colombia peso                     2927.78     0.93    1.85
 Peru sol                            3.289     0.18   -1.58
 Argentina peso (interbank)        30.9100     0.03  -39.83
 Argentina peso (parallel)            31.8    -0.47  -39.53
 (Reporting by Bruno Federowski; Editing by Dan Grebler)
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