Latin Currencies Surge as Weaker US Jobs Report Hits Dollar
Latin American currencies strengthened on Friday as a weaker-than-expected US jobs report weighed on the dollar and cooled expectations for a Federal Reserve interest-rate hike next month. The US Labor Department's report showed that the economy shed 23,000 jobs in July, defying expectations of 80,000 additions.
The US dollar index fell 0.4 percent, hitting a seven-week low, while money markets scaled back bets for a September Fed rate hike. Traders now price in a 44 percent chance of an increase, down from 55 percent before the employment data.
According to Juan Perez, director of trading at Monex, 'With not a solid belief in the Fed, terrible labor situation, and Yen intervention…it's helping LatAm improve. The monetary policy divergence is what's mattering right now.'
The MSCI index tracking Latin American currencies rose 0.2 percent, heading for a sixth straight week of gains.