Latin American currencies are under pressure from a strong dollar as traders await remarks from Federal Reserve Chair Jerome Powell on U.S. interest rates, while the Chilean peso reaches a three-week high; meanwhile, Argentina stocks are seen as a "safeguard of value" amid economic turmoil, but the country faces opposition to joining the BRICS bloc.
The dollar has reached a five-month high as investors anticipate the need for elevated interest rates due to the strong US economy, with factors such as weak growth in China and Europe, rising US yields, and falling equity prices further supporting the case for dollar strength.
Most Latin American currencies fell as the dollar strengthened on robust U.S. economic data, with the Mexican peso leading the declines, while Chile's peso gained after the central bank cut its benchmark interest rate and lowered its economic growth forecast for 2023.
Latin American currencies are experiencing their worst week in four weeks due to the stronger US dollar and concerns about China's economic growth, with Chile's peso hitting a nine-month low, while Brazil's real slipped and Colombia's peso advanced slightly.
The Mexican peso and other Latin American currencies strengthened as a weaker dollar and positive economic data from China boosted metal prices and supported resource-rich countries in the region.
Foreign holdings of U.S. Treasuries increased for a second consecutive month in July, reaching $7.655 trillion, despite uncertain interest rates and mixed economic data, with China's holdings dropping to the lowest level since 2009, potentially due to pressure to defend its weakening currency.
Latin American currencies pared gains against the dollar as the U.S. Federal Reserve signaled tighter monetary policy, while Brazilian stocks rose ahead of a rate cut by the central bank.
The upcoming episode of "The Trading Week Ahead" with Luca Santos focuses on the potential impact of the US Dollar strength on the EURUSD, GBPUSD, and AUDUSD currency pairs, analyzing the upcoming economic releases in the forex market.
Latin American currencies are facing downward pressure due to concerns about U.S. interest rates and weak copper prices, with the Brazilian real hitting a four-month low after disappointing industrial output data.
