LatAm currencies rise as weak US jobs data dents dollar; Brazil vote in focus
TLT•Most Latin American currencies rose as weaker-than-expected US jobs data reduced expectations of an October Fed rate hike; the regional currency index gained 0.33%, while stocks edged lower. A Datafolha poll showed Lula leading Flavio Bolsonaro by 3 percentage points ahead of Brazil’s first-round vote.
1. Jobs data weighs on dollar
US nonfarm payrolls rose by 29,000 in September, below economists’ expectations of 90,000, while unemployment increased to 4.2% from 4.1% in August. Markets priced in a 17% chance of a Fed rate hike in October, down from 22% before the data, and the US 10-year yield fell further. The MSCI Latin American currency index rose 0.33%, while its stocks equivalent slipped 0.07%.
2. Regional currencies diverge
The Mexican peso gained 0.7% and the Colombian peso rose 1.2%, the strongest gain among regional peers. Brazil’s real weakened 0.3% against the dollar.
3. Brazil election watched
Investors monitored Sunday’s first-round presidential vote. A Datafolha poll showed incumbent Luiz Inacio Lula da Silva leading Senator Flavio Bolsonaro by 3 percentage points, with a 2-point margin of error. Analysts said the real was likely to react sharply to the result as investors assessed its implications for Brazil’s fiscal outlook and debt dynamics.
