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Latam currencies gain on Fed optimism, Brazil assets dip

(Updates prices; adds quote) By Agamoni Ghosh July 11 (Reuters) – Latin American currencies were set to close higher on Thursday for a sixth straight session, taking cues from the U.S. Federal Reserve’s dovish stance, while assets in Brazil underperformed as the euphoria over the pension reform vote waned. MSCI’s Latin American currencies moved o.6% higher in line with emerging market peers as expectations of an interest rate cut by the Fed bodes well for developing market assets. The Mexican peso, which slid following the finance minister’s abrupt resignation on Tuesday, gained 0.3%, but overhangs regarding the country’s fiscal status kept investors nervous. Stocks dipped 0.2%. All five of the Mexican central bank’s board members agreed the slowdown in Mexico’s economy had been larger than anticipated, with “signs of weakness” in the second quarter, minutes from the June 27 monetary policy meeting showed on Thursday. The Chilean and the Colombian pesos gained between 0.3% and 0.7%, while the Peruvian sol was flat ahead of the release of the central bank’s monetary policy decision. “We expect the Peruvian central bank to keep rates on hold today and into 2020, as policymakers are likely to reiterate their plan to maintain the current expansionary policy stance for a prolonged period of time,” Morgan Stanley analysts said in a note. The real barely managed to stay in positive territory, while Sao Paulo-traded stocks slid 0.8%, easing off record high levels as enthusiasm over the passage of the pension reform bill in the lower house faded away. The lower house passed the main text of the bill on Wednesday by a far wider margin than predicted. House Speaker Rodrigo Maia said he hoped the complete bill could be put to a second, final vote by Friday. The pension reform is the cornerstone of President Jair Bolsonaro’s economic agenda aimed at saving the public purse around 1 trillion reais ($263 billion) over the next decade. Despite a slump in the Bovespa index, shares of Petroleo Brasileiro SA gained 1.5% after Goldman Sachs started coverage of the state-run oil company with a “buy” rating. Argentina’s benchmark index fell marginally, while the country’s peso gained 0.4%. Key Latin American stock indexes and currencies at 1915 GMT Stock indexes Latest Daily % change MSCI Emerging Markets 1,055.10 0.59 MSCI LatAm 2,961.73 0.33 Brazil Bovespa 105,240.05 -0.55 Mexico IPC 42,746.75 -0.14 Chile IPSA 5,073.71 0.13 Argentina MerVal 42,806.64 0.11 Colombia IGBC 12,967.39 -0.3 Currencies Latest Daily % change Brazil real 3.7510 0.04 Mexico peso 19.0833 0.24 Chile peso 681.2 0.62 Colombia peso 3,196.85 0.15 Peru sol 3.285 -0.06 Argentina peso (interbank) 41.6900 0.38 (Reporting by Agamoni Ghosh and Sruthi Shankar in Bengaluru Editing by Leslie Adler)

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