Mexico's peso bounced up after a big two-day slide, as Mexico reported progress on talks with Washington to avoid tariffs, while other regional currencies firmed after a speech by Federal Reserve Chair Jerome Powell made some investors believe a rate cut could be on the way. Mexico's peso rebounded as much as 1%. Mexican President Andres Manuel Lopez Obrador said he expects to reach a deal with the United States over immigration before June 10 - when punitive tariffs on Mexican exports to the Unites States are set to take effect at an initial 5%.
The peso was coming off its biggest two-day decline since last October, when the currency had tumbled after construction was canceled on a partially built $13 billion new airport in Mexico City. Brazil's real rose 0.5%, touching a seven week high, while the Chilean peso climbed 0.8% ahead of Powell's speech. The Colombian peso jumped almost 2% to an over two-week high.
In his opening remarks at a monetary policy conference on Tuesday, Powell said the Fed was "closely monitoring the implications" of a trade dispute and will respond "as appropriate" to the risks posed by a global trade war and other recent developments.
On Monday, St. Louis Fed president James Bullard said a US interest rate cut "may be warranted soon" given the rising risk to economic growth posed by global trade tensions as well as weak US inflation. Among stocks, Brazil stocks rose up to 0.4%, staying near two month highs. Largely broad based gains were capped by a 17% slump in petrochemical producer Braskem, after petrochemical giant LyondellBasell Industries said it ended talks to acquire the company. Chile shares rose 0.4% and looked set to extend gains to a fifth straight session, with Wall Street also opening higher on Fed rate cute hopes.
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