Reuters: US Dollar Report: EMERGING MARKETS-Latam FX gain on ECB plan, Brazil real little changed

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EMERGING MARKETS-Latam FX gain on ECB plan, Brazil real little changed Sep 6th 2012, 17:08 Tweet Share this Email Print Thu Sep 6, 2012 1:08pm EDT * ECB bond-buying plan supports investor appetite for Latam FX * Brazil real constrained by holiday, possible cenbank action * Mexican peso gains 0.6 pct, Brazil real up 0.2 pct By Natalia Cacioli and Anna Irrera SAO PAULO, Sept 6 (Reuters) - Latin American currencies gained on Thursday after details of a much-awaited ECB plan to support indebted euro-zone countries and strong U.S. economic data encouraged investors to take risk in emerging markets. The Mexican peso rose 0.6 percent to 13.0566 per U.S. dollar after trading as low as 13.0222, its highest level in four months. The Chilean peso jumped 1 percent to 475.90, its strongest in a month. Gains in the Brazilian real were limited, however, as investors avoided taking major positions before the release of crucial U.S. payroll data on Friday, when markets will be closed in Brazil due to a national holiday. "There is a key indicator tomorrow in the United States and that always pressures the currency because domestic markets don't know how global markets will react," said Ovidio Soares, a currency trader at Interbolsa do Brasil brokerage. Expectations that the U.S. payroll numbers will be strong grew after data this morning showed U.S. private employers added far more jobs than expected in August and new claims for jobless benefits fell last week to the lowest level in a month. The real edged up 0.2 percent to 2.0346 per dollar but was constrained by expectations that the Brazilian central bank may intervene if the currency nears the edges of a narrow range of 2.0-2.1 reais that it has been trading since early July. "Investors know that Brazil's government is going to uphold that range in order to make its (economic stimulus) measures more effective," said Enrique Alvarez, head of research for Latin America at IDEAglobal in New York. "That's what is holding the real." Details of the European Central Bank's new and potentially unlimited bond-buying program boosted sentiment in global markets, driving up Wall Street by around 2 percent. Brazil's interest rate-futures were little changed, however, after minutes of the central bank's latest monetary policy meeting left investors wondering whether the bank had finished its monetary easing cycle last month, or whether it will cut the base Selic rate one more time this year by 25 basis points. The Selic currently stands at an all-time low of 7.5 percent, after a 50-basis-point cut by the central bank on Aug. 29. In the minutes of that meeting, Brazilian policymakers expressed confidence that the economy will pick up speed in coming months and that the pace of annual inflation would return to a downward trajectory after a temporary spike in food prices. "I think the market didn't change its perception much" about the future of the Selic, said Silvio Campos Neto, an economist with Tendencias consultancy in Sao Paulo. "The minutes left the decision on another Selic cut hinging on upcoming economic data." Interest-rate contracts maturing in Jan. 2013 rose only 1 basis point to 7.28 percent while those maturing in Jan. 2014 traded at 7.79 percent, stable from Wednesday's close. Latin American FX prices at 1640 GMT: Currencies daily % YTD % change change Latest Brazil real 2.0346 0.19 -8.16 Mexico peso 13.0566 0.55 6.99 Argentina peso* 6.3300 0.32 -25.28 Chile peso 475.9000 1.03 9.12 Colombia peso 1,803.6500 0.30 7.47 Peru sol 2.6100 0.04 3.33 * Argentine peso's rate between brokerages Tweet this Link this Share this Digg this Email Reprints Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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