SAO PAULO: Latin American currencies weakened slightly on Monday as an abrupt slowdown in jobs growth in the United States and a pick-up in Chinese inflation prompted investors to cut exposure to riskier assets after the Easter break.
On Friday, while Latin American markets were closed for the holiday, data showed US payrolls grew by 120,000 in March, far below the expected gain of 203,000 jobs for the smallest rise since October.
The data signalled that the recovery of world's largest economy may not be as steady as some had expected, and came only three days after Federal Reserve policymakers backed away from the need for a fresh round of monetary stimulus.
The Mexican peso weakened 0.03 percent to 12.9817 per US dollar, while the Brazilian real lost 0.07 percent to bid 1.8255 per dollar.
"The US dollar tends to strengthen in the short term (versus the Brazilian real) as part of a global profit-taking movement," said Andr? Perfeito, chief economist at Gradual Investimentos, a S?o Paulo brokerage.
The main US stock market indexes fell more than 1 percent and gold prices rose in the spot market on Monday, more evidence of widespread risk aversion.
Mexico's currency is particularly sensitive to US data as many Mexicans work in US factories and the United States buys nearly 80 percent of Mexico's exports by value.
Investors were also worried about the slowing Chinese economy. Annual inflation climbed to 3.6 percent in March, from 3.2 percent in the prior month, led by volatile food prices.
While the higher-than-expected data may not prevent the Chinese government from stimulating its economy this year, analysts said the price outlook seems now a bit more unfavorable in Asia, denting demand for commodities.
Chile's peso, closely linked to copper prices, lost 0.46 percent to bid 485.70 per dollar. Chile gets more than half of its export earnings from copper, a key component in electrical and electronic equipment.
However, the spike in risk aversion may be short-lived, creating buy opportunities as Mexico's economic data due this week, like fixed investment industrial production, may be better, wrote Marc Chandler, global head of currency strategy at Brown Brothers Harriman, in a note.
"We prefer to take advantage of near-term weakness to pick up some cheaper pesos," he said. "The next level of resistance for the US dollar is seen near 13.12 pesos."
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