LatAm assets advance on softer dollar, stronger commodities

Economies in the region are also bracing for severe El Nino from October to December that could further pressure agricultural supply that was already strained by the Middle East conflict. A UN official said on Thursday that there is a high probability that it could be an intense El Nino like the one in 2015. Colombia's stocks gained 0.4%. Argentina's currency and the Peruvian sol firmed 0.3% each. Elsewhere, Ukraine's central bank unexpectedly delivered a 50 basis points rate-hike and signaled further policy tightening to curb inflation pressures. July 30 - Latin American currencies advanced on Thursday against a softer dollar as investors assessed key economic data from the U.S., and higher metal prices lifted equities in the commodities-dependent region. U.S. economic growth slowed in the second quarter, while separate data showed that the Personal Consumption Expenditures (PCE), the Federal Reserve's preferred gauge for inflation, came in line with analysts' expectations. MSCI's index tracking Latin American currencies advanced 1.3%, and was at more than a two-month high as the dollar index slipped to more than a one-month low following a more than a 2% jump in the Japanese yen, with traders alerting to a suspected intervention from Japan. Colombian peso, the region's best performing currency this year, led the gains, rising 1.2%, and the Chilean peso gained 1%. Some investors, however, cautioned that positioning in both currencies has become crowded. "We maintain our view that fixed income offers stronger risk-reward (in LatAm), but hedge ratios will likely remain higher until there is better visibility into the Fed’s intentions," said Geoff Yu, senior EMEA market strategist at BNY. The broader Latin American equities index gained 2.1%, with equities in Argentina leading the gains, climbing 2%. Chilean stocks rose 0.6%, tracking higher copper prices, while Mexico's benchmark equity index advanced 0.7%. Mexican peso rose 0.5% after preliminary data showed that Mexican economy grew at its fastest pace since late 2020 in the second quarter, fueled mainly by primary activities such as farming, fishing, and mining. In Brazil, president Luiz Inacio Lula da Silva's attempt to reduce consumer debt through a debt-relief program has brought little reward, with data showing household debt easing only marginally in May. The local currency real rose 1.1%, while its equities added 0.8%. Political tension in the region's largest economy also remain in the spotlight ahead of October's presidential election amid a growing rightward shift in the region. Brazil has been withholding the formal diplomatic approval for the next U.S. ambassador to take up his post, deepening the rift with Washington, while the president also confirmed that the government had denied visas to two U.S. officials, accusing them of seeking to interfere in the election.

LatAm assets advance on softer dollar, stronger commodities

Other regional moves and weather risk

Currencies and equities gain as dollar softens

Regional stocks climb, led by Argentina and commodities-linked markets

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