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Latam FX slip ahead of U.S, Brazil rate decisions

July 30 (Reuters) – Latin American currencies slipped on Tuesday as investors awaited the conclusion of a U.S. Federal Reserve policy meeting for clues on the direction of interest rates, while Brazilian shares were hit by declines in banking stocks. The real edged lower for a second day ahead of Brazil’s central bank decision on Wednesday. A Reuters poll of 27 economists showed the median forecast was for an interest rate cut of 25 basis points to 6.25%. Brazil is the latest among a series of developing world economies to cut rates to combat a slowdown in growth, spurred by trade disputes. However, the focal point for markets is whether the Fed will signal if its widely expected 25-basis-point rate cut is the start of a new easing cycle. “With cross-currents persisting and inflation remaining subdued, we look for the Fed to leave the door open to further easing but to avoid pre-committing to further cuts,” TD Securities macro strategist Oscar Munoz said in a note. Shares of Brazil’s largest lender, Itau Unibanco Holding fell about 3% as it expects its loan book to grow close to the bottom of its target range in 2019 and announced cost cuts amid rising competition. Other banks such as Banco Bradesco and Banco do Brasil fell about 1%. Mexico’s peso held steady. President Andres Manuel Lopez Obrador told Bloomberg in an interview on Monday that it was important to lower interest rates to encourage economic growth while reiterating that he respected the autonomy of the central bank. Key Latin American stock indexes and currencies at 1343 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1043.08 -0.25 MSCI LatAm 2854.93 -0.7 Brazil Bovespa 102839.31 -0.62 Mexico IPC – – Chile IPSA – – Argentina MerVal – – Colombia IGBC – – Currencies Latest Daily % change Brazil real 3.7915 -0.23 Mexico peso 19.0681 -0.08 Chile peso 699 -0.41 Colombia peso 3297.27 -0.53 Peru sol – – Argentina peso 43.9000 -0.14 (interbank) (Reporting by Sruthi Shankar in Bengaluru; Editing by Bernadette Baum)


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