LatAm currencies rise as weak US jobs data dents dollar; Brazil vote in focus
EWZ•Most Latin American currencies strengthened as weak US jobs data reduced expectations of an October Fed rate hike; the region’s currency index rose 0.33%, while its stock index edged down 0.07%. A Datafolha poll showed Lula leading Flavio Bolsonaro by 3 percentage points ahead of Brazil’s first-round vote.
1. Currencies gain on jobs data
US nonfarm payrolls rose by 29,000 in September, below economists’ expectation of 90,000, while unemployment increased to 4.2% from 4.1% in August. Markets priced in a 17% chance of an October Fed rate hike, down from 22% before the data, and the US 10-year yield fell further. The Colombian peso rose 1.2% and the Mexican peso gained 0.7%, while Brazil’s real fell 0.3%.
2. Brazil vote draws attention
Investors were watching Sunday’s first round of Brazil’s presidential election. 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 vote as investors assessed its implications for the fiscal outlook and debt dynamics.
