EMERGING MARKETS-Latam FX weakens as Fed euphoria proves brief
 By Susan Mathew Aug 27 (Reuters) - Euphoria after U.S. Federal Reserve
Chairman Jerome Powell outlined a new inflation strategy proved
brief on Thursday, reversing rallies and paring gains for most
emerging market currencies. The U.S. central bank said it will seek to achieve inflation
averaging 2% over time, offsetting below-2% periods with higher
inflation "for some time," and to ensure employment doesn't fall
short of its maximum level. The dollar dove and riskier currencies hit
session highs, but the rally soon faded and the greenback gained
ground as analysts broke down the announcement. "What's missing here is an articulation of how exactly we're
going to get higher inflation," said Roberto Perli, head of
Global Policy Research at Cornerstone Macro, Washington. "Even the statement of longer-run goals just says we're
going to use all of our tools. But it sounds like the tools are
going to be the old tools and those old tools were not
successful in producing higher inflation in the past. So why
should they be successful this time around?" Among Latin American currencies, Mexico's peso fell
0.4% after hitting 11-week highs in the session. Minutes from
Bank of Mexico's previous meeting showed members' belief that
the Mexican economy's recovery will depend on the coronavirus
pandemic being contained and the development of a vaccine. A day after data showed a historic slide in GDP, numbers on
Thursday showed Mexico posted a record trade surplus in July of
$6.752 billion as exports of automotive and other manufactured
goods gathered steam amid an easing of coronavirus lockdowns. But as imports fell, trade may remain weak in the rest of
the year, following the contraction of both the global and
Mexican economy, FX strategists at Citigroup said. Brazil's real was flat after gaining at least 1%. Sentiment remained fragile in Brazil after President Jair
Bolsonaro rejected a proposal by Economy Minister Paulo Guedes
for a new cash welfare program on Wednesday, highlighting a
split between the two and raising speculation about Guedes'
departure. But, the economy ministry said Guedes will not be
announcing his resignation. "The risk of an eventual Guedes departure will keep
overhanging the market," Citigroup strategists said. "And in the bigger picture pressures will remain until a
fiscally responsible draft of the program is revealed, and even
then risks remain high as demand for more fiscal spending is likely to resurface from time to time." Chile's peso lost 0.3% after gaining as much as 0.7%,
with lower prices of its biggest export item, copper, also
weighing. Key Latin American stock indexes and currencies at 1432 GMT: Stock indexes Latest Daily % change MSCI Emerging Markets 1117.20 -0.19 MSCI LatAm 1939.56 -0.5 Brazil Bovespa 100804.48 0.18 Mexico IPC 37765.15 0.03 Chile IPSA 3856.99 -0.12 Argentina MerVal 46174.11 0.747 Colombia COLCAP 1223.70 -0.29 Currencies Latest Daily % change Brazil real 5.6076 0.07 Mexico peso 22.0430 -0.51 Chile peso 785 0.10 Colombia peso 3822.77 0.17 Peru sol 3.5777 -0.22 Argentina peso 73.9300 -0.09 (interbank) (Reporting by Susan Mathew in Bengaluru; additional reporting
by Karen Pierog in New York) 

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