Brazil, Mexico currencies up

The currencies of Brazil and Mexico firmed on Wednesday, benefiting from prospects that the Federal Reserve will cut interest rates soon after data showed that US inflation barely rose in May. The greenback held steady after a brief dip on the data. Emerging market currencies tend to firm on expectations of Fed interest rate cut as a higher borrowing cost environment tends to divert money out of riskier assets.
A steady move higher in US interest rates last year saw outflows in emerging markets that contributed to currency crises in Argentina and Turkey among others.
Brazil's real climbed 0.4% with hopes of pension reform passage, seen as crucial to get the economy back on track, lifting sentiment toward the currency. "We remain optimistic passage and stay bullish BRL," analysts at Citigroup said in a note.