LatAm FX under pressure as dollar strengthens

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By Pranav Kashyap Most Latin American currencies fell on Tuesday against a stronger dollar amid renewed global bond-market pressure, as investors digested regional data and awaited this week's key U.S. jobs report. The MSCI index for Latin American currencies (.MILA00000CUS) declined 0.55%, while a similar gauge for stocks (MILA00000PUS) slipped 0.39%. The dollar index TVC:DXY jumped 0.73% due to a broader rise in bond yields, driven by growing worries about fiscal pressures worldwide. The greenback's next moves will hinge on Friday's U.S. non-farm payrolls report, which could shift market expectations for the Federal Reserve's September policy decision. In Latam, the Brazilian real FX_IDC:USDBRL fell 0.57%, while the country's main index BMFBOVESPA:IBOV dropped about 0.7%, as second-quarter GDP showed a steep slowdown, though it outperformed market expectations.Although inflation has eased, it remains above the central bank's target range, prompting caution."Brazil's economy is like driving with your foot on the accelerator, your foot on the brake at the same time," said David Nicholls, emerging markets portfolio manager at East Capital. However, the economic slowdown, coupled with an improving inflation outlook, provides Brazil's central bank with scope to begin lowering interest rates after maintaining them at a near two-decade high in July. "You're not seeing the outflows, but you're not seeing inflows as well. When we start to see rates come down, you will start to see more of local investors coming in," Nicholls added. Argentine assets drew attention ahead of elections in Buenos Aires on September 7 and midterm polls in October. The Argentine peso FX_IDC:USDARS, FX_IDC:USDARS, which hit a record low in the previous session, rose 1.45% after the Treasury said it would intervene in the foreign exchange market to boost liquidity and stabilize the currency amid mounting uncertainty ahead of the midterm elections. Stocks in Buenos Aires BCBA:IMV climbed 1.32%.The Mexican peso FX_IDC:USDMXN slipped 0.4%, while the main stock index BMV:ME surged 1.5% to reach an all-time high, driven by gains in lender Banorte BMV:GFNORTE/O and the Mexican unit of retailer Walmart BMV:WALMEX. Chile's peso FX_IDC:USDCLP fell 0.7% to a near one-month low, while its benchmark index BCS:SP_IPSA edged up 0.3%. Colombian stocks BVC:ICAP declined 0.8%, while the country's currenc...

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