Soft US Jobs Data Boosts Latin American Currencies Amid Brazil Election Jitters

Latin American currencies got a much-needed boost on Friday after a softer-than-expected US jobs report. The data showed payrolls rising by just 29,000 in September, compared to the expected 90,000. This led markets to trim the implied odds of an October Federal Reserve rate hike to 17% from 22%, and US 10-year yields slipped further.

As a result, MSCI's regional currency index rose by 0.33%, with Mexico's peso leading the pack at 0.7%. Colombia's peso also gained 1.2%. However, Brazil's real was an exception to this trend, falling 0.3% as investors remained focused on the country's upcoming presidential vote.

Datafolha's latest poll shows President Luiz Inacio Lula da Silva leading Senator Flavio Bolsonaro by 3 percentage points, but still effectively tied within the margin of error. UBS warned that the currency could react sharply to the election result, particularly if it signals looser fiscal policy.