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Latam FX tepid on smaller U.S. rate-cut bets, oil price jump caps losses

July 22 (Reuters) – Latin American currencies were subdued on Monday in line with the broader emerging markets as expectations of an aggressive interest rate cut by the U.S. Federal Reserve waned following an easing in China-U.S. trade tensions, but a jump in oil prices helped limit losses. The South China Morning Post reported trade negotiators from the United States may visit China next week for their first in-person talks with Beijing officials since the G20 meeting at the end of June when U.S. President Donald Trump held off imposing new tariffs on Chinese goods. While a cut of 25 basis points by the Fed next week has been priced in by the markets, expectations lessened for a cut of as much as 50 basis points on the trade issue and economic data stabilizing. Oil prices, which rose on concerns that Iran’s seizure of a British tanker in the Strait of Hormuz last week may lead to supply disruptions, helped currencies of crude exporters cap losses with Colombia’s peso trading flat. Brazil’s real climbed 0.3% while Sao Paulo-traded stocks moved half a percent higher aided by gains in financial companies. Vale however, slid more than 1% after it said its second-quarter iron ore production tumbled almost 34% from a year ago as many of its dams remained all or partially shut down following a deadly dam burst in January. Mexican stocks along with the peso slid, as concerns about state-run oil firm Pemex re-emerged after it warned of a risk of delays to President Andres Manuel Lopez Obrador’s flagship Dos Bocas refinery project as per Mexican newspaper Reforma. Chile’s peso rose marginally, tracking a gain in the price of copper, Chile’s top export, while stocks on the IPSA index moved 0.3% higher. Latin American stock indexes and currencies at 1451 GMT: Stock indexes daily % Latest change MSCI Emerging Markets 1053.89 -0.34 MSCI LatAm 2924.71 0.38 Brazil Bovespa 104242.92 0.56 Mexico IPC 41377.68 -0.55 Chile IPSA 5058.09 0.33 Argentina MerVal 39349.52 -2.02 Colombia IGBC 12976.50 -0.07 Currencies daily % change Latest Brazil real 3.7392 0.34 Mexico peso 19.0597 -0.19 Chile peso 687.9 -0.17 Colombia peso 3176.68 -0.18 Peru sol 3.285 -0.09 Argentina peso 42.4100 0.07 (interbank) (Reporting by Agamoni Ghosh in Bengaluru; editing by Grant McCool)

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