Off The Wire
EMERGING MARKETS-LatAm currencies ease as U.S. producer prices rise
By Bruno Federowski
SAO PAULO, Sept 13 (Reuters) - Latin American currencies weakened on Wednesday after U.S. producer prices rebounded in August, sparking bets on accelerating inflation that could drive the Federal Reserve to raise U.S. interest rates again this year.
A surge in the cost of gasoline drove U.S. producer prices 0.2 percent higher in August after slipping 0.1 percent in July, and there were also signs of a pickup in underlying producer inflation. The increase fueled expectations that consumer inflation data due on Thursday could surpass analysts' expectations, bringing some comfort to the U.S. central bank that the pace of price hikes may be advancing toward its target of 2 percent.
Inflation has lagged expectations for months despite signs of labor market tightening, puzzling Fed policymakers and casting doubts over its stated plan of hiking rates for a third time this year. Should it follow through with those plans, that could hamper investor demand for high-yielding emerging market currencies.
The Brazilian real slipped 0.25 percent, and the Mexican peso fell 0.09 percent. Chile's peso led the region's losses, dropping 0.74 percent as it tracked a decline in copper prices.
Brazil's benchmark Bovespa stock index rose 0.5 percent.
Traders were somewhat cautious after Brazil's top court approved a new graft probe against President Michel Temer for suspected corruption involving a decree regulating the country's ports. The investigation could delay his efforts to implement market-friendly reforms.
Shares in JBS SA jumped nearly 2 percent in volatile trading after police detained its chief executive officer, saying he used insider information to avoid hefty losses related to a plea bargain signed earlier this year. Traders said the move could accelerate a change in command that may help the world's largest meatpacker lick the wounds from a massive corruption scandal.
Key Latin American stock indexes and currencies at 1943 GMT:
Stock indexes daily % YTD %
Latest change change MSCI Emerging Markets 1098.62 -0.33 27.83 MSCI LatAm 2962.31 -0.38 27.04 Brazil Bovespa 74936.20 0.53 24.42 Mexico IPC 50180.98 -0.59 9.94 Chile IPSA 5162.91 -0.12 24.37 Chile IGPA 25804.31 -0.11 24.45 Argentina MerVal 23797.01 1.14 40.66 Colombia IGBC 11172.84 -0.24 10.32 Venezuela IBC 351810.03 16.03 1009.63 Currencies daily % YTD %
Latest Brazil real 3.1364 -0.25 3.60 Mexico peso 17.7480 -0.09 16.88 Chile peso 626.65 -0.74 7.03 Colombia peso 2910.25 -0.06 3.14
Peru sol 3.238 -0.15 5.44 Argentina peso 17.0600 0.12 -6.95 (interbank) Argentina peso 17.8 0.45 -5.51 (parallel) (Reporting by Bruno Federowski, editing by G Crosse and Cynthia Osterman)