Latin American currencies failed to gain against a weak dollar on Tuesday, as cautious investors pared exposure ahead of the end of the U.S. Federal Reserve's two-day meeting on Wednesday, while Latin American stocks ticked up in line with their U.S. peers.
Market participants shirked riskier assets in emerging markets and exited bullish positions on the dollar, adding safe haven currencies such as Japan's yen and the Swiss franc to their portfolios.
In the United States, the Dow Jones Industrial Average and the Nasdaq Composite recorded minor gains while the S&P 500 ended flat.
Many investors are betting the Fed will signal a cautious outlook to its path for raising interest rates in 2019. A hike in borrowing costs on Wednesday is broadly expected, with markets according that outcome a probability of about 73% percent, as per the CME FedWatch tool.
Brazil's real weakened 0.3% while the Bovespa stocks index tacked on 0.2%, aided by gains in the financials and materials sectors. Giant miner Vale SA rose for a fourth straight session, trading up 0.4%. However, state-controlled Petrobras slid 3.4% to a more than two month closing low, weighed on by a steep drop in global oil prices.
Mexican stocks gained 1.4% to make back a chunk of Monday's 2.4% loss while the Peso was little changed before the Fed decision. The central bank of Latin America's second largest economy is due to take a call on interest rates a day after the Fed, on Thursday. The Banco de Mexico is expected to raise its key interest rate by 25 basis points to 8.25%, which would be its highest level since August 2008.
Matching the negative sentiment of its regional currency peers, Colombia's peso slid 0.9%, while its Chilean peer weakened 0.3%.
Argentina's equity benchmark slipped 0.4% to sink to a fresh near one-month closing low, while the Peso softened marginally.
Likewise Argentina's country risk according to the JP Morgan scale jumped six points on Tuesday and reached 781 points, its highest in three months.