SAO PAULO: The Mexican peso slipped on Thursday after US manufacturing activity increased to its strongest level in nearly three years, driving expectations of faster rate hikes in coming months.
An index of US national factory activity tracked by the Institute for Supply Management rose to 57.8 last month, the strongest reading since August 2014, driving US 10-year yields to their highest levels in seven weeks.
The figures allayed some concerns over the pace of economic recovery that had left traders skeptical of the Federal Reserve's stated plan of raising US rates once more before the end of 2017 and another three times next year.
Faster policy tightening could dampen the allure of high-yielding emerging market assets, weighing on the value of their currencies.
Mexico's peso weakened 0.56 percent against the dollar, tracking currencies from other emerging markets, and reaching its lowest level in over a week. Trading volumes were thin ahead of the US July Fourth holiday on Tuesday.
The benchmark Mexican stock index tracked Wall Street higher, rising to a lifetime high and closing up 0.5 percent.
The Brazilian real rose slightly. Traders pointed to receding fears that a corruption scandal could delay President Michel Temer's agenda of economic structural reforms.
Brazil's benchmark Bovespa stock index rose 0.4 percent as rising prices of iron ore lifted shares of miner Vale SA.
Shares of sewage and water utility Cia de Saneamento de Minas Gerais SA, which are not part of the benchmark index, leapt after regulators allowed the company to raise tariffs by more than expected.
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