Led by the Brazilian realmost Latin American currencies erased early gains when they were boosted by weak employment data in the United States that reinforced expectations of an interest rate cut by the Federal Reserve, and went into the ground negative now awaiting the presidential elections in the world’s largest economy.
The Brazilian real depreciated 1.2%, to 5.855 units per dollar, a level not seen in 2024, pressured by nervousness before the elections in the United States and by fiscal fears at the local level. Meanwhile, the Bovespa index of the Sao Paulo B3 stock market fell 1.1%, to 128,310 points.
Brazilian industrial production grew more than expected in September, in another sign of economic strength that is likely reinforce bets on an acceleration of monetary tightening by the Central Bank at its meeting next week.
Meanwhile, U.S. employment growth slowed sharply in October amid disruptions from hurricanes and strikes by aerospace factory workers, but the unemployment rate remained stable at 4.1%, offering assurances that the labor market remains on solid footing ahead of Tuesday’s election.
After this report, futures traders raised to 99% the chance of a 25 basis point interest rate cut by the Fed next week and a new reduction in December, to continue its monetary relaxation cycle next year.
Now the markets’ gaze focuses on Tuesday’s presidential election, where polls show a close race between Democratic Vice President Kamala Harris and former Republican President Donald Trump and on the decision that the Fed will announce on Thursday, when conclusion of its two-day monetary policy meeting.
Meanwhile, heThe US currency, which was hit by the negative employment data, recovered from an initial drop and gained just over 0.2% against a basket of six major currencies that make up the dollar index.
On the other hand, the Mexican peso was trading at 20.0356 per dollar, with a drop of 0.12%, in a market awaiting the US presidential election, while investors evaluated employment figures in the United States and Mexico.
Later, the central bank of Mexico is expected to publish its monthly survey of economic expectations among private specialists, the market will be attentive mainly to the evolution of its forecasts for GDP, inflation and the key interest rate. The main stock index S&P/BMV IPC, which makes up the 35 most liquid companies in the Mexican market, rose 0.11%, to 50,715.55 units.
The Colombian peso recovered 0.31% to 4,410 units per dollar, after five sessions of losses that keep the local currency at 17-month lows. On the stock market, the MSCI COLCAP stock index rose 0.24% to 1,361.59 points.
Markets in Chile and Peru remained closed on Friday due to religious holidays.
Source: Ambito
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