RIO DE JANEIRO, Oct 21 (Reuters) - Most Latin American
currencies weakened on Monday as investors grew anxious before
the release of key U.S. unemployment data delayed by a 16-day
partial government shutdown this month.
A notable exception was the Brazilian real, which was steady ahead of a central bank's decision on whether to roll over some $8.9 billion worth of currency swaps, derivatives that policymakers have been selling to shore up the real.
The U.S. nonfarm payroll data for September, which will be released on Tuesday at 1230 GMT, could put the focus back on the timing of an expected withdrawal of U.S. stimulus measures, likely determining investor appetite for risky emerging-market assets over the next few months.
Latin American currencies rallied earlier this month as investors bet the Fed would keep the stimulus in place longer to offset the negative economic impact of the government shutdown.
"The emerging market rally started before the agreement on the U.S. budget and debt ceiling, such that it was 'buy on rumor' and 'sell on fact,' with no obvious relief rally after resolving the event risk", Siobhan Morden, head of Latin America strategy at Jefferies, wrote in a research note.
* The Mexican peso dropped 0.8 percent, also pressured by data showing retail sales fell in August from the previous month, supporting bets that the central bank will lower interest rates this week.
* Most analysts expect the Mexican central bank to cut its benchmark interest rate for the second month in a row on Friday, by 25 basis points to 3.5 percent, to support the economy.
* The Brazilian real was steady at 2.1745 per dollar, however, as investors awaited the results of a central bank survey to gauge market demand for the roll-over of about $8.9 billion worth of currency swaps.
* Brazil's central bank will conduct the survey after the market closes on Monday. If it decides to roll over the swaps, it will auction new contracts on Tuesday, Wednesday and Thursday, the bank said on Friday.
* Some analysts believe Brazil's central bank might chose to roll over only part of the expiring swaps to remove part of the support given to the real, which has been trading near its strongest level in about four months.
yahoo.com
A notable exception was the Brazilian real, which was steady ahead of a central bank's decision on whether to roll over some $8.9 billion worth of currency swaps, derivatives that policymakers have been selling to shore up the real.
The U.S. nonfarm payroll data for September, which will be released on Tuesday at 1230 GMT, could put the focus back on the timing of an expected withdrawal of U.S. stimulus measures, likely determining investor appetite for risky emerging-market assets over the next few months.
Latin American currencies rallied earlier this month as investors bet the Fed would keep the stimulus in place longer to offset the negative economic impact of the government shutdown.
"The emerging market rally started before the agreement on the U.S. budget and debt ceiling, such that it was 'buy on rumor' and 'sell on fact,' with no obvious relief rally after resolving the event risk", Siobhan Morden, head of Latin America strategy at Jefferies, wrote in a research note.
* The Mexican peso dropped 0.8 percent, also pressured by data showing retail sales fell in August from the previous month, supporting bets that the central bank will lower interest rates this week.
* Most analysts expect the Mexican central bank to cut its benchmark interest rate for the second month in a row on Friday, by 25 basis points to 3.5 percent, to support the economy.
* The Brazilian real was steady at 2.1745 per dollar, however, as investors awaited the results of a central bank survey to gauge market demand for the roll-over of about $8.9 billion worth of currency swaps.
* Brazil's central bank will conduct the survey after the market closes on Monday. If it decides to roll over the swaps, it will auction new contracts on Tuesday, Wednesday and Thursday, the bank said on Friday.
* Some analysts believe Brazil's central bank might chose to roll over only part of the expiring swaps to remove part of the support given to the real, which has been trading near its strongest level in about four months.
yahoo.com
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