By Ragini Mathur and Purvi Agarwal
July 3 (Reuters) - Most Latin American currencies gained on Thursday, as investors shifted to riskier assets following stronger-than-expected U.S. jobs data that underscored the resilience of the labor market, while attention remained on global trade deals involving the United States.
U.S. job growth was solid in June, and the unemployment rate unexpectedly fell, suggesting the labor market remained stable and potentially enabling the Federal Reserve to delay resuming its rate-cutting cycle until September.
"I don't think that the market could take away something too hawkish from this but also it's difficult to price substantially more cuts that are enough to drive more dollar weakness on monetary policy expectations," said Gilberto Hernandez-Gomez, LatAm local market strategist and vice president at BBVA.
Investors were also relieved by some progress on the trade front, as U.S. President Donald Trump finalized a deal with Vietnam on Wednesday, imposing a 20% tariff on exports to the United States, lower than the previously threatened 46%.
The dollar index =USD traded higher on the day as investors priced in fewer Fed rate cuts. MSCI's index for Latin American currencies .MILA00000CUS, meanwhile, rose 0.5% to its highest since 2009.
Mexico's peso MXN= outpaced regional peers with a 0.7% rise against the dollar, touching its highest since August 2024.
The Brazilian real BRL= also climbed 0.2%, hitting its highest since October.
Minutes of the last meeting of Chile's central bank revealed that it had considered a 25-basis-point cut, despite an unchanged macroeconomic scenario. It ultimately held rates in June. Chile's peso CLP= was last down 0.3%.
Meanwhile, the MSCI stocks gauge .MILA00000PUS jumped 1.1%, trading around levels last seen in May 2024.
Heavyweight Brazilian shares .BVSP gained 1.5%, boosted by gains in financials and utilities.
Trump's tax-cut package cleared its final hurdle in U.S. Congress, as the Republican-controlled House of Representatives narrowly approved the massive bill and sent it to him for signing into law.
Earlier in the day, the United States lifted restrictions on exports to China for chip design software developers and ethane producers, further easing tensions between the two largest economies.
Elsewhere in emerging markets, the International Monetary Fund said it would combine the fifth and sixth reviews of Egypt's $8 billion support program this fall. It also urged Ukraine to adhere to its economic reforms and national revenue strategy as its continues to combat Russia's invasion.
Highlights:
** Poland's July rate cut not the start of a cycle, central bank chief says
** Sri Lanka's economic outlook positive but global trade concerns pose risks, IMF says
** Colombia president recalls ambassador to US
Key Latin American stock indexes and currencies:
Equities | Latest | Daily % change |
MSCI Emerging Markets .MSCIEF | 1235.23 | 0.41 |
MSCI LatAm .MILA00000PUS | 2387.62 | 1.06 |
Brazil Bovespa .BVSP | 141180.61 | 1.53 |
Mexico IPC .MXX | 57967.78 | -0.65 |
Argentina Merval .MERV | 2073952.92 | 0.53 |
Chile IPSA .SPIPSA | 8270.43 | 0.02 |
Colombia COLCAP .COLCAP | 1683.96 | -0.59 |
Currencies | Latest | Daily % change |
Brazil real BRL= | 5.4119 | 0.21 |
Mexico peso MXN= | 18.6673 | 0.69 |
Chile peso CLP= | 929.24 | -0.31 |
Colombia peso COP= | 3987.5 | -0.03 |
Peru sol PEN= | 3.544 | 0.1 |
Argentina peso (interbank) ARS=RASL | 1229.5 | 0.04 |
Argentina peso (parallel) ARSB= | 1215 | 2.06 |