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Central bank decisions in U.S., Brazil, Chile this week

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Brazil's January economic activity beats estimates

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Mexican stock market closed for public holiday

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Latam stocks up 1.5%, FX adds 0.6%

(Updates with mid-session trading)

By Shashwat Chauhan and Purvi Agarwal

March 17 (Reuters) - Most Latin American currencies

strengthened against a weakening dollar on Monday, kicking off a

week packed with interest rate decisions globally, including in

Brazil, Chile and the United States.

The centerpiece of the week is the Federal Reserve's

interest rate decision on Wednesday, with markets widely

expecting the central bank to hold its rate steady.

"We should worry about whether the Fed fails to live up to

the market's hope for two or three rate cuts this year, borne by

suspicion the Fed is not 'in charge' anymore, having

relinquished control of macroeconomic policy to the Trump

administration," said Thierry Wizman, global FX and rates

strategist at Macquarie.

Data on Monday showed U.S. retail sales rebounded marginally

in February.

The back-and-forth in U.S. trade policy has rattled markets

of late, with the dollar dipping against most developed market

peers. Latin American currencies - including Mexico's - have

cashed in on the greenback's weakness.

Mexico's peso gave back early gains and was last down

0.2%, but hovered near its highest since November. The currency

has been rebounding from its February lows when U.S. President

Donald Trump pledged to impose 25% tariffs on all goods coming

from Mexico, but later exempted them under an existing North

American trade pact for a month.

"The most aggressive U.S. tariff proposals are unlikely to

materialize fully, with the strength of the Mexican peso serving

as an indicator that markets share this view and are looking

through tariff-related noise," said analysts at Ashmore Group.

The OECD still forecast that Trump's

tariff hikes

will drag growth in Canada, Mexico and the U.S., while

driving inflation higher.

Brazil's real strengthened 0.9% after briefly hitting

an over four-month high in the run-up to a likely interest rate

hike on Wednesday, bringing the Selic rate to 14.25%.

Central bank data released on Monday showed Brazil's

economic activity grew more than expected in January.

Chile's peso firmed 0.9%, to its highest since

October, ahead of a local interest rate decision on Friday, with

expectations tilted towards the central bank holding rates

steady at 5%.

Worries around a possible U.S. economic slowdown have

weighed on global risk assets lately, though JP Morgan analysts

note that EM stocks could be an "accidental beneficiary" of the

scare, upgrading their recommendation to "neutral" from

"underweight."

MSCI's index for Latin American stocks

advanced 1.5%, taking its yearly gains to nearly 15%, far

outperforming the U.S. S&P 500, which has fallen almost

4% year-to-date and slipped into a technical correction last

week.

Local bourses had an upbeat start to the week, with Brazil's

Bovespa gaining 1.6%, trading at its highest level this

year.

The much-broader MSCI gauge for EM stocks,

meanwhile, advanced 1.1% as investors assessed plans from the

Chinese government to boost domestic consumption.

Equity markets in Mexico were closed for a public holiday.

Elsewhere, Kenya's international bonds fell with Kenya and

the International Monetary Fund (IMF) set to discuss a new

lending programme and abandon the current one.

Key Latin American stock indexes and currencies:

MSCI Emerging Markets 1132.3 1.13

MSCI LatAm 2126.95 1.52

Brazil Bovespa 130999.91 1.58

Mexico IPC - -

Chile IPSA 7601.82 1.24

Argentina Merval 2346010.2 0.45

5

Colombia COLCAP 1634.64 0.88

Brazil real 5.6843 0.94

Mexico peso 19.9525 -0.2

Chile peso 920.75 0.85

Colombia peso 4069.91 0.6

Peru sol 3.641 0.41

Argentina peso (interbank) 1067.5 -0.09

Argentina peso (parallel) 1235 0.40