Most Latam FX track lower commodity prices, Brazil data in focus

Most currencies of resources-rich Latin America slipped on Monday, tracking weak commodity prices, while robust Brazilian economic data bolstered the case for interest rate hikes and strengthened the real.

China pledged on Saturday to "significantly increase" spending to revive its sputtering economy, but left investors guessing the overall size of the stimulus package.

Crude oil prices slipped more than 1%, while prices of base metals such as copper also tumbled on a lack of detail on China's stimulus plans.

Oil producer Mexico's peso USDMXN slipped 0.7%, while Colombia's peso USDCOP held steady in choppy trading.

Currencies of top copper producers in the region Chile USDCLP and Peru USDPEN lost 0.1% and 1%, respectively.

Later in the week, Chile's central bank is expected to lower its benchmark interest rate by 25 basis points to 5.25%, a poll of traders released by the bank showed.

Bucking the trend, the real USDBRL ticked up 0.6% to 5.58 per dollar in turbulent trading. Brazil's economic activity again surprised on the upside in August, central bank data showed, reinforcing a view of heated economic momentum that prompted policymakers to kick off a monetary tightening cycle last month.

"While the data is positive, indicating that Brazil's economic activity remains strong, it also reinforces the central bank's decision to raise interest rates during the last COPOM meeting," said Matheus Zani, FX risk manager at Deaglo.

Brazil's central bank sees strong economic activity as a major factor behind its monetary policy decision, incoming Governor Gabriel Galipolo said.

Two sources from Brazil's Finance Ministry told Reuters that President Luiz Inacio Lula da Silva's government is preparing to roll out measures to curb mandatory spending after a second round of municipal elections at the end of the month.

Concerns about Brazil not meeting its annual fiscal targets, along with a monetary policy pivot earlier this year have sparked uncertainty about the region's largest economy. The real and the Bovespa IIBOV are both on track for losses this year.

MSCI's index for Latin American currencies (.MILA00000CUS) was last up 0.8%, while stocks (.MILA00000PUS) added 1.45%.

Other bourses were mixed, with Argentina's Merval index IMV and Colombia's main index (.COLCAP) up over 1% each, while the Mexican benchmark ME fell 1%.

Most EM assets ex-China posted marginal gains and losses last week as brimming tensions in the Middle East and the continuous repricing of the U.S. Federal Reserve's interest rate path led to choppy trading.

On Thursday, a U.S. retail sales reading and jobless claims data could set the tone for market expectations around the Fed's rate path.

Key Latin American stock indexes and currencies: