October 7, 2019 / 7:48 PM / 10 days ago

EMERGING MARKETS-Brazil real leads Latam FX lower as trade concerns weigh

 (Updates prices)
    By Susan Mathew
    Oct 7 (Reuters) - Latin American currencies slid on Monday
after a three-day run of increases as the dollar gained favor
amid skepticism over the outcome of U.S.-China trade talks this
week.
    MSCI's index of Latin American currencies
was down 0.8% after rising 1.9% last week, while its equities
counterpart slumped 2%.   
    Last week, worries about global growth and trade disputes
initially hit sentiment, but U.S. data on Friday showing modest
job growth quelled some recession worries and sparked a rally in
risky assets.
    There were mixed signals on the trade front ahead of
high-level talks scheduled for Oct 10-11. U.S. President Donald
Trump's chief economic adviser on Monday said it was possible
that the two sides could make progress during the talks, and
that delisting Chinese companies is off the table.
    Over the weekend, a Bloomberg report said Chinese officials
were reluctant to agree to Trump's demand for a broad trade
deal.
    Brazil's real led losses, down more than 1%, while
other Latam currencies fell between 0.2% and 0.6%, as trade
worries outweighed optimism from a bill unveiled by the
Brazilian central bank aimed at modernizing and simplifying the
country's foreign exchange market.
    The bill is marginally positive, the head of trading at one
bank said. The announcement had been widely flagged.
    "The highlight of the week (in terms of economic data in
Brazil) will be the release of inflation for September and
retail sales figures for August," wrote Credit Suisse analysts
Leonardo Fonseca and Lucas Vilela in a note published before the
unveiling of the forex bill. 
    Inflation data is due on Wednesday and Credit Suisse expects
an increase of 0.05% on a month-on-month basis for September,
slower than the 0.1% rise last month, keeping the central bank
on track for further easing. The bank has cut interest rates
twice this year.    
    Analysts expect retail sales to rise 0.3% month-on-month, a
faster pace than a 0.1% increase in July. 
    In Mexico, annual consumer price inflation likely cooled in
September to a three-year low, potentially paving the way for
further interest rate cuts by the central bank, a Reuters poll
showed on Monday. The print is set for Oct 9.
    Stocks in the region were largely weaker, in line with a
choppy session on Wall Street. Sao Paulo-listed shares shed 1.6%
with broad-based losses, while those in Argentina were
set to post their worst day in two weeks. 
    
    Latin American stock indexes and currencies 1930 GMT:
    Stock indexes             Latest    Daily %
                                         change
 MSCI Emerging Markets          993.51     -0.31
                                        
 MSCI LatAm                    2639.77     -1.94
                                        
 Brazil Bovespa              100911.31      -1.6
                                        
 Mexico IPC                   43029.93     -0.89
                                        
 Chile IPSA                    5051.36      0.22
                                        
 Argentina MerVal             31221.66     -1.87
                                        
 Colombia IGBC                12940.43     -0.04
                                        
                                                
       Currencies             Latest    Daily %
                                         change
 Brazil real                    4.1017     -1.12
                                        
 Mexico peso                   19.5620     -0.28
                                        
 Chile peso                      717.8     -0.32
                                        
 Colombia peso                 3449.85     -0.54
 Peru sol                        3.382     -0.09
                                        
 Argentina peso                57.8300     -0.14
 (interbank)                            
                                        
    

 (Reporting by Susan Mathew in Bengaluru; Editing by Dan
Grebler)
  
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