June 17, 2019 / 7:44 PM / a month ago

EMERGING MARKETS-Latam FX dip as dollar comes off lows ahead of Fed outcome

 (Updates prices)
    By Susan Mathew
    June 17 (Reuters) - Latin American currencies slipped on
Monday, with Brazil's real giving up early gains, as the dollar
came off session lows ahead of a Federal Reserve meeting later
this week.
    The dollar steadied, hovering near the two-week highs hit
earlier in the session, as investors reconsidered how dovish the
Fed is likely to be after its two-day meeting set to end on
Wednesday.
    "We don't see preemptive cuts, leaving the Fed in
wait-and-see mode," wrote Mark McCormick, global head of FX
strategy at TD Securities, in a note.
    "If the Fed can engineer a low-volume outcome this week that
should reinforce the broad dollar," he said, which could hurt
developing world currencies.
    Mexico's peso deepened its declines. Rating agency
Moody's said unpredictable policymaking by the Mexican
government and challenges facing debt-laden state oil firm Pemex
are clouding economic and fiscal outlook for Mexico. Moody's had
lowered its outlook on Mexico to negative earlier this
month.
    Colombia's peso touched its lowest in more than one
week, while a recovery in copper prices helped stem losses in
Chile's peso. Copper is Chile's main export.
    Brazil's real gave up early gains to trade 0.16%
lower ahead of the country's central bank rate decision on
Wednesday. The benchmark interest rate is expected to be left
unchanged, according to a Reuters poll, but it suggested that
policy easing may be in the offing.
    On the pension reform front, Economy Minister Paulo Guedes
said the bill could still be saved if lawmakers reverse some
changes made to the draft last week. The changes and Guedes'
criticism of it had hit markets on Friday.
    But lower house Speaker Rodrigo Maia said the changes will
help ensure it gets majority backing in the final lower house
vote and that he expects the special congressional committee to
approve the bill on June 26.
    Stocks in Sao Paulo traded flat, in line with world
stocks, as did most other regional bourses.

    State-run oil company Petroleo Brasileiro
 rose 0.6% despite a fall in oil prices.
    The firm said it made natural gas discoveries, which as per
a report newspaper report, could help deliver the "cheap energy
shock" to Brazil promised by Guedes.
    Planemaker Embraer SA rose on signing a contract
worth $1.9 billion with United Airlines for the delivery
of up to 39 E175 jets.
    Mining major Vale weighed the most. Iron ore
prices fell after Vale said it expects to soon restore 20
million tonnes of yearly capacity at its Brucutu mine in
Brazil.
    Markets in Argentina were closed for a local holiday.
    
    Key Latin American stock indexes and currencies at 1930 GMT:
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets         1011.48     -0.35
                                        
 MSCI LatAm                    2742.62     -0.41
                                        
 Brazil Bovespa               98021.42     -0.02
                                        
 Mexico IPC                   43150.81      0.05
                                        
 Colombia IGBC                12305.02     -0.09
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    3.9019     -0.08
                                        
 Mexico peso                   19.1745     -0.13
                                        
 Chile peso                      700.2     -0.06
                                        
 Colombia peso                 3281.03     -0.39
 Peru sol                        3.347     -0.03
                                        
 

 (Reporting by Susan Mathew in Bengaluru; Editing by Richard
Chang)
  
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