LatAm currencies weighed down by dollar, stocks hit by risk-off sentiment

By Utkarsh Hathi

Most Latin American currencies weakened on Tuesday against a steady dollar, while equities lost ground, as a global risk-off sentiment triggered by AI-linked concerns spilled into emerging markets.

The dollar index TVC:DXY was marginally higher, extending its recovery from more than two-week lows, with traders awaiting minutes from the Federal Reserve's June meeting for policymakers' view on monetary policy.

On Tuesday, global chip stocks sold off despite blockbuster results from Samsung Electronics, dampening risk sentiment. Wall Street's benchmark S&P 500 dipped 0.07% and the tech-heavy Nasdaq slipped 1.4%.

Still, Deutsche Bank analysts expect a better remaining 2026 for the region, citing the fading impact of the energy shock driven by Middle East conflict, firmer confidence, AI-led exports and some World Cup impulse.

Euphoria for AI-linked equities has sparked a divergence in the performance of Asian tech-heavy EMs and commodity-rich Latin American ones in recent times.

The Mexican peso FX_IDC:USDMXN fell 0.5%, while Brazil's real FX_IDC:USDBRL traded 0.3% lower.

Argentina's peso FX_IDC:USDARS weakened 0.3%, while its stocks BCBA:IMV lost 1%. The country signaled on Monday its intention to stay away from returning to the debt market for now, with the economy minister saying the government expects to meet debt payments with multilateral loans, privatizations and local bond issuance.

The Colombian peso FX_IDC:USDCOP gained 0.2% ahead of the June inflation figures to be released later in the day, and stocks BVC:ICAP declined 0.9%.

Deutsche Bank analysts said Colombia faces one of the toughest paths toward monetary-policy normalization in the region, citing the impact of lower oil prices and tighter external financial conditions.

Meanwhile, oil prices gained 2.2% following reports of attacks on vessels near the Strait of Hormuz.

Oil giants in the region climbed with Brazil's Petrobras BMFBOVESPA:PETR3 up 1.8% and Colombia's Ecopetrol BVC:ECOPETROL up 0.8%. They limited broader declines in the benchmark indexes.

Equities in Mexico BMV:ME slipped 0.9% and ones in Chile BCS:SP_IPSA were up 0.3%. Mexico's Grupo Mexico BMV:GMEXICO/B lost 2.3%, tracking lower prices of metals.

The broader MSCI Latin American currency index (.MILA00000CUS) edged 0.3% higher, while the stocks equivalent (.MILA00000PUS) fell 0.3%.

Data showed stronger copper exports helped Chile post a June trade surplus that exceeded market forecasts in the world's largest copper producer.

Investors are also monitoring a busy week for emerging-market central banks, with many policy decisions due that could shape expectations for regional interest-rate trajectories.

In Peru, central bank chief Julio Velarde said on Monday that he will remain in the role at the request of President-elect Keiko Fujimori, signaling continuity in the macroeconomic policies that have helped keep inflation in check in the Andean nation.

Peru's sol FX_IDC:USDPEN was flat, while the stocks (.MXNUAMPESCPGPE) declined 0.9%.

Key Latin American stock indexes and currencies: