Brazil's real, stocks lead Latam assets higher on vaccine optimism

Most Latin American currencies came off early losses on Monday, trading higher amid increased bets for a COVID-19 vaccine after a wave of positive early-trial data.

Early data from trials of three potential coronavirus vaccines released on Monday, including a closely watched candidate from Oxford University, increased confidence that a vaccine can train the immune system to recognize and fight COVID-19 without serious side effects.

Most Latin American currencies gained on the news, with analysts positing improvement in regional risk assets as more countries in the region scale back virus-related lockdowns.

Brazil's real came off mild initial losses and was set for its best day in nearly three weeks.

On Friday, Brazilian Treasury Secretary Roberto Funchal said the government is analyzing the possibility of allowing Brazilians to withdraw money from their pension funds early, with questions about the harm it could do to Brazilian Treasury bonds being a major concern.

Foreign exchange strategists at JP Morgan see Brazil's real outperforming owing to better economic growth in China - a major destination for Latin American commodity exports.

"There are some initial signals that China's growth continues for a while longer, benefiting commodity prices and currencies," they said.

"China's commodity import volume also maintained strong momentum into June in the latest data. We think in this scenario Brazil's real would outperform MXN."

Stocks in Brazil rose more than 1% to their highest in more than four months, driven by gains in the communication sector.

Telecom stocks TIM Participacoes and Telefonica Brasil rallied after they teamed up with Mexico's America Movil to make an offer for the mobile unit of bankrupt Brazilian carrier Oi Group.

Chile's peso rose slightly after government officials presented a plan to ease certain virus-related lockdowns as the infection rate of the disease improved in some regions of the country. Chile has so far reported 330,000 confirmed cases and more than 8,500 deaths related to COVID-19.

In Mexico, deaths from the disease rose to 39,184, while the total number of cases stood at 344,224 as of Sunday.

The peso rose slightly, remaining under pressure from weaker oil prices amid worries over the pace of the global spread of the pandemic.

Argentina's peso continued its slide into record low territory. The country on Friday confirmed its highest daily coronavirus caseload after easing restrictions.

Colombian markets were closed for a local holiday.