March 26, 2020 / 2:27 PM / 13 days ago

EMERGING MARKETS-Latam FX, stocks rally strongly after U.S. jobless claims data

    By Susan Mathew
    March 26 (Reuters) - Latin American currencies erased early
losses to trade 1% higher  on Thursday after a record rise in
U.S. jobless claims to 3.3 million saw the dollar deepen losses.
    Mexico's peso and Brazil's real both jumped
1%, looking to extend gains to a third straight session as the
flood of monetary and fiscal stimulus from the United States
eased some funding concerns, keeping the dollar pressured.
    On Thursday, the greenback deepened losses after data showed
U.S. weekly jobless claims shot up from 282,000 last week. The
number came in above forecasts and showed how deeply the
coronavirus pandemic had impacted the economy, forcing layoffs.

    The dollar's weakness this week has helped Latam currencies
lift from all-time lows they had been pushed to as the world
panicked about the likelihood of a deep recession as lockdowns
in many countries to contain the spread of the virus threatened
to bring economic activity to a halt. 
    Chile's peso firmed 1.2% in what could be its fourth
day of gains, while Colombia's peso rose 1.5%.
    The optimism helped investors look past Brazil's central
bank slashing its 2020 economic growth forecast for the country
to zero percent from 2.2%.
    
    STOCKS RALLY TOO
    U.S. stocks indexes opened higher after the data, with most
analysts saying the data had been more or less priced in with
this being only the beginning of worse yet to come. Some others
said it may force yet more stimulus measures.
    "This is a troubling number but given the non-farm payrolls
survey week has already passed, the full ramifications will not
be until the May release of the April employment report," said
Ian Lyngen, head of U.S. rates strategy at BMO Capital, New
York.
    Colombia stocks surged 5.3%, building on
Wednesday's 13% jump. 
    Sao-Paulo listed shares jumped 4.5% while those in
Santiago rose 3.6%. MSCI's index of regional stocks
 up 5.5%, putting it on course for its best week
in four years and break a five-week losing streak. 
    Monex's FX analyst Simon Harvey points out that the U.S.
jobs number is subject to a lot of noise as it is hard to filter
out the increase in the structural unemployment rate from
temporary claims due to the containment policies. 
    
    Key Latin American stock indexes and currencies at 1406 GMT:
  Stock indexes          Latest   Daily
                                    %
                                  change
 MSCI Emerging            851.54    1.79
 Markets                          
 MSCI LatAm              1697.20    5.35
                                  
 Brazil Bovespa         78350.31    4.53
                                  
 Mexico IPC             36022.04    1.37
                                  
 Chile IPSA              3235.34    3.59
                                  
 Argentina MerVal           0.00       0
                                  
 Colombia COLCAP         1124.49    7.49
                                  
                                        
     Currencies          Latest   Daily
                                    %
                                  change
 Brazil real              4.9970    0.69
                                  
 Mexico peso             23.7300    0.85
                                  
 Chile peso                836.9    0.91
                                  
 Colombia peso           4010.48    1.33
                                  
 Peru sol                 3.4598    0.46
                                  
 Argentina peso          64.2250   -0.27
 (interbank)                      
                                  
 
 (Reporting by Susan Mathew in Bengaluru, additional reporting
by Gertrude Chavez in New York
Editing by Nick Zieminski)
  
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