SAO PAULO: Latin American currencies slipped on Thursday as stronger-than-expected US jobs data drove investors to book profits on the previous day's rally.
The Brazilian real slipped 0.5 percent to 3.16 to the greenback in late morning trading. It had firmed past 3.15 on Wednesday after minutes from the US Federal Reserve's last policy meeting showed increasing wariness over recent weak inflation.
According to the document, some policymakers called for halting interest rate hikes until it becomes clear that trend will not last, boosting demand for high-yielding emerging market currencies.
Sentiment changed quickly on Thursday, however, after a report showed the number of Americans filing for unemployment benefits fell to near a six-month low last week. Analysts said a further tightening in the US labor market could encourage the Fed to lay out a plan to start unwinding its massive bond portfolio.
The Mexican peso was down 0.4 percent as renegotiation of the North American Free Trade Agreement continued. The United States on Wednesday drew a hard line, demanding major concessions aimed at slashing trade deficits with Mexico and Canada and boosting US content for autos.
Latin American stock exchanges were mixed, with Brazil's benchmark Bovespa stock index trading lower following four straight days of gains.
Shares of Centrais El?tricas Brasileiras SA were the biggest decliners after regulators demanded the state-controlled power holding return 3 billion reais ($948 million) received as subsidies to a government fund.
Concerns that the Brazilian government may not be able to pass a reform of the social security system, seen as key to curbing the growth of public debt, also weighed on demand for stocks in the country.
"The sentiment in Congress is unfavorable towards the government," analysts at brokerage Lerosa Investimentos wrote in a client note, saying Brazil had become a "hostage" to lawmakers.
Economists polled by Reuters say Brazil will need to announce new fiscal measures by year-end to meet fiscal targets, even after softening them.
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