A firmer U.S. dollar raised the local-currency cost of servicing dollar debt across Latin America on Friday. Investors waited for U.S. jobs data that could shift regional funding costs, while higher oil prices offered potential revenue support to exporters including Brazil, Colombia and Mexico. Oil also raised fuel costs and complicated inflation. The gains and costs fell unevenly across countries and sectors.
Debt and market exposure
The U.S. nonfarm payrolls report, average hourly earnings and unemployment rate were scheduled for 09:30 Brasília time. Private payrolls were expected to slow sharply. The result could influence the dollar and regional financing costs, linking currency and bond markets to U.S. employment data.
At the Oct. 1 close, the real weakened 0.84% against the dollar, with USD/BRL at 5.2176. The Mexican peso weakened 1.26%, and USD/MXN stood at 18.2965. The Chilean peso weakened 1.40%, with USD/CLP at 986.18. The Colombian peso strengthened 0.61%, while Argentina’s official peso was nearly flat against the dollar.
A separate board dated Oct. 2 at 06:45 listed the Ibovespa at 187,197.46, up 0.46%. The Mexican IPC fell 0.60%, Chile’s IPSA fell 0.56%, and Colombia’s COLCAP fell 0.75%. Argentina’s Merval was unchanged. The same board showed USD/ARS at 1,493, up 0.10%, and described the parallel rate as the market’s real pricing signal.
Brazil’s real began Friday under modest pressure after the dollar rose overnight. The report said the stronger dollar increased hedging costs and made Brazil’s Selic rate more sensitive to U.S. yields. The Selic is Brazil’s benchmark interest rate. A softer U.S. 10-year Treasury yield could support emerging-market carry trades, the report said, while describing the yield as historically high.
The U.S. ISM manufacturing index registered 54.5 against a forecast of 55. Its prices-paid gauge rose to 77.9 from 71.1. Regional currencies faced the prospect of higher import and financing costs tied to a stronger dollar.
Oil income, prices and public finances
Elevated oil prices could support government revenue and companies including Petrobras and Ecopetrol. They could also raise fuel costs and complicate inflation. Brazil, Colombia and Mexico are oil exporters, and Colombia faced the competing effects of oil income and a firmer dollar.
Brazil’s manufacturing PMI fell to 44.8 in September from 46.3, its weakest reading since April 2023. Mexico’s manufacturing PMI rose to 50.3 from 49.8, but its business confidence index reached 48.4 and stayed below 50 for a 19th consecutive month. Mexico’s finance ministry reported a January-August fiscal deficit of MXN 739 billion, about US$40 billion, compared with MXN 1.015 trillion programmed.
Chile’s economic activity index fell 1.0% year on year in August after a 1.5% decline in July. Copper mining fell 17.4%. Argentina’s tax agency reported September revenue of AR$21.36 trillion, up 38.3% in nominal terms. Peru’s annual inflation in Lima rose to 4.55% in September, above the central bank’s 1%-3% target range.
Trading gains and losses
In Brazil, truck and machinery rental company Vamos rose 4.7% on R$322 million turnover. Azzas, described as logistics and equipment, gained 7.0% on R$158 million, while retailer Casas Bahia rose 8.2% on R$27 million. Petrobras preferred shares recorded R$1,697 million turnover, Itaú Unibanco R$2,597 million and Vale R$1,867 million. The report identified Itaú, Petrobras and Vale among the most-traded names.
Gold and silver were higher on the overnight board, supporting mining in Peru and Mexico. Brazil’s Ibovespa had risen for three consecutive sessions but remained about 6% below its 52-week high. Mexico’s IPC stood about 11% below its 52-week high. The report said a decisive dollar rise after the U.S. jobs data could weigh on regional equity boards, while a retreat could support a rally led by energy stocks.