Latam FX under pressure as commodities decline

Updated at 10:45 a.m. ET/ 1445 GMT

By Shashwat Chauhan

Oct 16 (Reuters) –Most Latin American currencies extended losses on Wednesday, as the prices fell of iron ore and oil, among the regions’ biggest exports, and the market focused on economic data and geopolitics.

Mexico’s peso MXN= slipped 0.9% in early trading, having fallen more than 3% this week, while Colombia’s peso COP= eased 0.4%, touching a one-month low.

Crude oil prices slipped in choppy trading, while iron ore fell on the prospect of weakening global demand. IRONORE/

Uncertainty over the magnitude of stimulus from leading commodities consumer China has added to expectations of reduced demand.

Brazil’s real BRL= shed 0.4% after falling 1% in the last session, briefly spiking to a more than two-month low earlier in the session.

The world’s biggest copper producer Chile’s peso CLP= was flat at 941.4 per dollar, while Peru’s sol PEN= eased 0.1% against the greenback.

Prices of the metal rebounded after the market stabilised at a technical support level. MET/L

Later in the week, Chile’s central bank is expected to lower its benchmark interest rate by 25 basis points to 5.25%.

Latin American currencies have come under pressure as rising expectations of smaller rate cuts by the Federal Reserve, faltering expectations around Chinese stimulus and geopolitical tension have made investors risk averse.

On Thursday, U.S. retail sales reading and jobless claims data could set the tone for market expectations around the Fed’s rate path.

Nervousness ahead of the U.S. presidential election next month also led to wariness.

“The risk appetite remains low as the results can be binary, especially for some EM jurisdictions,” analysts at Citi wrote in a note.

On Tuesday, Republican candidate Donald Trump defended his protectionist trade policies and other fiscal proposals.

The threat of tariffs could be damaging for trade partners such as Mexico.

MSCI’s gauge for Latin American currencies .MILA00000CUS fell 0.7%, while stocks .MILA00000PUS was down 0.4%.

Mexican telecommunications giant America Movil AMXB.MX rose more than 2% after it more than tripled its net profit in the third quarter from a year ago, in part because a weaker peso boosted its foreign earnings and also because financing costs fell.

In other emerging markets, Namibia’s central bank cut its main interest rate for the second meeting in a row to 7.25%, saying inflation had fallen surprisingly quickly and the economy needed more support.

Key Latin American stock indexes and currencies:

Reporting by Shashwat Chauhan in Bengaluru; editing by Barbara Lewis