Latam FX rises against softer dollar, Vale weighs on Brazil's Bovespa
Dollar dips ahead of Fed rate decision
Chile's economic activity falls less than expected in December
Peru consumer prices rise 0.23% in January, below forecasts
Moody's affirms Peru rating but unrest triggers negative outlook
Vale weighs on Bovespa after Q4 iron ore output edges down
Latam stocks down 0.6%, FX adds 0.4%
By Bansari Mayur Kamdar
Feb 1 (Reuters) -Currencies in Latin America on Wednesday rose against a weaker dollar in the lead-up to a much-awaited interest rate decision by the Federal Reserve, while Brazilian stocks fell sharply, led by weakness in Vale, one of the world's largest mining companies.
Chile's peso CLP= climbed 0.3% against the greenback after data showed its economy beat analyst forecasts in December.
The IMACEC economic activity index of the world's largest copper producer still ended 2022 in negative territory as it faced a slowdown after a rapid post-pandemic recovery.
The Colombian peso COP= snapped three days of losses and gained 0.3% to 4654 against the dollar, while oil producer Mexico's peso MXN= added 0.5%, supported by firm crude prices and a weak dollar.
All eyes were on the Fed's rate decision, with investors pricing a 25 basis points rise later in the day and betting on an end to the rate hikes soon.
"There is this view in the marketplace that, yes, the Fed is going to hike, but they're very near the end of that cycle, so they'll signal a more neutral stance," said Rachel Ziemba, founder of Ziemba Insights.
"The bigger point continues to be that some of the Latam central banks were more ahead of the curve and inflation is looking a bit more manageable, so it is not a surprise to me that the more liquid Latam currencies are strengthening a bit more."
Latin American stocks .MILA00000PUS fell 0.6%, underperforming the 1.2% jump in the broader emerging markets index .MSCIEF as Chinese stocks rallied after data showed factory activity in the world's second largest economy shrank more slowly in January than in the previous month.
In Brazil, the Bovespa index .BVSP fell 1.1%, as Vale VALE3.SA slid after reporting a 1% fall in iron ore production for the fourth-quarter from a year earlier.
Brazil's real BRL=, BRBY slipped against the dollar ahead of its rate decision. The central bank is expected to keep rates unchanged at 13.75%, according to a Reuters poll.
Data showed producer prices in Latin America's largest economy fell to 1.29% from the previous month, while another survey showed factory activity in Brazil shrank again in January.
"We're continuing to see the market be a bit skeptical about Brazilian macro policy," added Ziemba.
Peru's sol PEN= edged up against the dollar after data showed a smaller-than-expected rise in inflation.
Moody's Investors Service affirmed its investment grade rating for Peru on Tuesday, but cut its outlook on the sovereign to negative from stable, citing the possibility of further deterioration amid an ongoing political crisis.
Key Latin American stock indexes and currencies at 1505 GMT:
Daily % change
MSCI Emerging Markets .MSCIEF
MSCI LatAm .MILA00000PUS
Brazil Bovespa .BVSP
Mexico IPC .MXX
Chile IPSA .SPIPSA
Argentina MerVal .MERV
Colombia COLCAP .COLCAP
Daily % change
Brazil real BRBY
Mexico peso MXN=D2
Chile peso CLP=CL
Colombia peso COP=
Peru sol PEN=PE
Argentina peso (interbank) ARS=RASL
Argentina peso (parallel) ARSB=
Reporting by Bansari Mayur Kamdar in Bengaluru; editing by Jonathan Oatis
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.