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Local Currencies Extend Gains Pre-FOMC, Buoyed By Softer Greenback

LATAM FX
  • The dollar index has been extending its decline on Wednesday ahead of the FOMC decision where rates are expected to be left unchanged. The greenback decline has been exacerbated by the USD index breaching its 100-day moving average. Buoyant global equity benchmarks are underpinning the rally for high beta currencies with outperformance being seen in the likes of AUD & NZD in G10.
  • Similar optimism is being felt across the emerging market space with LatAm currencies continuing to shine. USDMXN continues to close the gap with the next key objective around 17.05 and USDBRL has declined another 0.5% since the open. Bullish bets on Brazil have been mounting, with several analysts highlighting the growing potential for a dovish shift from the central bank. This theme is well evidenced by the following article: Fidelity, Hedge Funds Buy Brazil Stocks as Outlook Brightens - {NSN RW910IT0G1KW <GO>}
  • Below gives key levels of LatAm markets in current trade:
    • USDMXN down 0.71% at 17.1005
    • USDBRL down 0.62% at 4.8327
    • USDCLP down 0.49% at 799.63
    • USDCOP down 0.28% at 4183.26
    • USDPEN down 0.21% at 3.647
    • Bloomberg Dollar Index down 0.55% at 1225.06
    • JPMorgan EM Ccy Index up 0.52% at 49.895
    • S&P E-Mini Future up 13 points (0.29%) at 4429.5
    • Copper Futures up 3.85 (1.01%) at 386.95
    • Brazil Ibovespa up 1587.73 points (1.36%) at 118340.63
    • Mex Bolsa up 756 points (1.39%) at 55255

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