SAO PAULO, June 14 Latin American currencies
strengthened on Wednesday after weaker-than-expected U.S.
economic data further cooled expectations of multiple interest
rate hikes in the second half of the year.
U.S. retail sales in May recorded their biggest drop in 16
months and consumer prices unexpectedly fell, according to data
released hours before the U.S. Federal Reserve published its
Traders widely expect the U.S. central bank to hike rates by
a notch on Wednesday, but a mixed batch of economic figures has
cast a shadow on expectations of at least two additional hikes.
A slower pace of tightening could sustain demand for
emerging market assets, which tend to lure foreign investors
with the promise of higher yields.
The Brazilian real strengthened 1 percent, the
biggest gainer in the region, while the Mexican peso
firmed 0.7 percent.
Brazil's benchmark Bovespa stock index inched up 0.3
percent, supported by rising shares of Banco Bradesco SA
after a federal court cleared the lender's chief
executive offices of illegally dodging a tax fine.
Strategists at Itaú BBA on Wednesday cut their
recommendation for Brazilian stocks to "underweight" from
"neutral," saying heightened uncertainty over the fate of a
proposed pension reform is likely to lead to higher funding
costs and a weaker currency.
Strategists upgraded their recommendation on Mexican shares
to "overweight" on forecasts of stronger earnings growth, but
warned of potential volatility around the 2018 presidential
elections and coming NAFTA negotiations.
Key Latin American stock indexes and currencies at 1555 GMT:
Stock indexes daily % YTD %
MSCI Emerging Markets 1016.21 0.64 17.11
MSCI LatAm 2552.47 1.41 7.53
Brazil Bovespa 62032.97 0.33 3.00
Mexico S&P/BMV IPC 49276.07 0.51 7.96
Chile IPSA 4878.56 -0.07 17.52
Chile IGPA 24417.58 -0.06 17.76
Argentina MerVal 21324.47 -0.32 26.05
Colombia IGBC 10780.07 0.21 6.44
Venezuela IBC 107843.20 4.57 240.14
Currencies daily % YTD %
Brazil real 3.2748 1.01 -0.78
Mexico peso 17.9330 0.65 15.68
Chile peso 659.8 0.19 1.65
Colombia peso 2922.91 0.19 2.69
Peru sol 3.269 0.28 4.44
Argentina peso (interbank) 15.8600 0.19 0.09
Argentina peso (parallel) 16.44 0.24 2.31
(Reporting by Bruno Federowski; editing by Grant McCool)