Most Latin American currencies strengthened on Friday after a stronger-than-expected US jobs report eased concerns about a sharp slowdown in the world's largest economy, encouraging investors to take on risk in emerging markets. The currencies of Mexico and Chile gained 0.7 percent and 0.5 percent, respectively, after the report showed US employers added 165,000 new jobs last month, more than the 145,000 expected by economists.
The US jobless rate fell to a four-year low of 7.5 percent as a result. The US data was especially relevant for Mexico, which sends most of its exports to its northern neighbour. The Brazilian real softened slightly in thin trading, however, as investors had little incentive to bet on a stronger currency due to a weak domestic data and possible central bank interventions in the market.
Among the latest data underscoring Brazil's economic challenges, industrial production for March rose about half as much as investors expected. On Thursday, another report showed Brazil recorded in April its third traded deficit in four months as local industry struggled. "The market is much quieter and investors are cautious due to domestic and external uncertainties," said Reginaldo Siaca, a manager at Advanced brokerage in Sao Paulo. He noted the government seems to be comfortable with an exchange rate around 2 reais per dollar, which limits investors' willingness to make strong bets on different currency levels.