Latam FX firms on rate cut hopes, Brazil's real outperforms

Rising bets on an interest rate cut by the US Federal Reserve boosted Latin American stocks and currencies, with Brazil's real jumping to an over three-month high on optimism over the government's pension reform.

The real firmed at 3.7969 per dollar, its strongest level since March 22, with Brazil's special congressional committee set to vote on an amended pension reform bill presented by coordinator Samuel Moreira.

Lower House Speaker Rodrigo Maia said earlier this week the committee will vote on plans to generate savings of around 940 billion reais ($244 billion) over the next decade.

"We expect the reform to be approved by the Chamber of Deputies in August, with total expected fiscal savings of 750 billion reais in ten years," Credit Suisse analysts wrote in a note.

Signs of progress in the pension reform has eased investors nerves around Brazil as economists slashed their 2019 growth outlook in recent weeks amid high unemployment and a global slowdown.

The Bovespa shot to another record, helped by banking shares such as Banco Bradesco SA and Itau Unibanco Holding SA. Shares of state-run oil firm Petrobras gained despite a dip in oil prices

With US markets closed for its Independence Day holiday, risk assets elsewhere rallied on hopes the Fed will cut interest rate as early as July after soft US economic data and the nominated European Central Bank chief Christine Lagarde will keep to a dovish policy path, sending benchmark debt yields tumbling and the dollar down.

The Mexican peso rose for a fourth day in a row, while the Chilean peso and the Colombian peso also made slight gains.