January 8, 2019 / 2:56 PM / 6 months ago

EMERGING MARKETS-Brazil's real leads Latam FX gains on pension reform hopes

    By Aaron Saldanha
    Jan 8 (Reuters) - Brazil's real firmed against the dollar on
Tuesday, with investors anticipating tougher government
proposals on pension reform, while the losses among some Latin
American currencies reversed after comments by U.S. President
Donald Trump on trade.    
    Financial markets are hoping that new Brazilian President
Jair Bolsonaro's government will take steps to make deeper cuts
to the country's fiscal deficit than envisaged under the
previous government.
    Bolsonaro, who was elected in October and has been an
outspoken proponent of shrinking the deficit, is meeting with
his cabinet later on Tuesday. 
    The real was up to 0.6 percent firmer on Tuesday, not
far from more than a two-month peak seen in Monday's session.
    Luis Felipe Laudísio, a trader at Renascença, said any news
of Bolsonaro's pension reform proposal being tougher than that
of his predecessor, Michel Temer, should be seen as positive, if
confirmed.
    The Bovespa equity benchmark dipped 0.3 percent. The
index slipped further away from an all-time peak hit on Friday,
dragged down by weakness among financials. 
    Brazilian airline Gol, however, was the top
loser, with its preferred shares falling 3.2 percent after it
released its preliminary fourth-quarter results.
    Meanwhile, Trump said in a tweet that talks with China were
going very well.    
    "China, trade, and Fed. These three risk factors are
critical to the price action, especially in high-beta
currencies," Mark McCormick, North American head of FX strategy
at TD Securities, wrote in a note. 
    Mexico's peso, considered by some investors to be a
weather vane of trade sentiment, erased early losses after
Trump's tweet and gained 0.3 percent. Its trading volumes were
about 200 percent of their average over the past week, based on
Refinitiv Eikon data, after the tweet.
    Chile's peso was initially weaker, as were prices of
copper, a metal sensitive to global trade and Chile's
top export. The currency jumped 0.4 percent following Trump's
tweet, while local stocks traded 0.3 percent
higher.
                   
    
    Key Latin American stock indexes and currencies at 1407 GMT
    
 Stock indexes                           daily %
                             Latest       change
 MSCI Emerging Markets          972.98     -0.51
                                        
 MSCI LatAm                    2738.72     -0.37
                                        
 Brazil Bovespa               91388.20     -0.34
                                        
 Mexico IPC                          -         -
                                        
 Chile IPSA                    5205.21      0.29
                                        
 Argentina MerVal                    -         -
                                        
 Colombia IGBC                       -         -
                                        
                                                
 Currencies                              daily %
                                          change
                                Latest  
 Brazil real                    3.7281      0.11
                                        
 Mexico peso                   19.3375      0.09
                                        
 Chile peso                      679.1      0.10
                                        
 Colombia peso                 3169.71      0.32
 Peru sol                        3.356     -0.12
                                        
 Argentina peso                37.3200      0.00
 (interbank)                            
                                        
 
 (Reporting by Aaron Saldanha in Bengaluru and Claudio Violante
in Sao Paulo
Editing by Paul Simao)
  
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