Concerns over softening global demand have so far outweighed any benefits from lower US rates and Latam currencies remain under pressure. The currencies of Colombia, Brazil and to a lesser degree Mexico are getting hit by lower energy prices and investors in the region will have to take a firm view on how far and fast this correction in crude oil prices can extend, ING’s FX strategist Chris Turner notes.

Little respite for Latam currencies this month

“In addition, local negative stories continue to undermine Mexico's peso and Brazil's real. The potential passage of judicial reforms is still weighing on the peso. In Brazil, the next significant event risk (beyond US politics) will be the selic rate decision on 18 September.”

“It seems the market is pricing and needs a hawkish hike from Brazil's central bank. Any reference to "gradualism" or an unclear path on the extent of the tightening cycle could hit the real and call on the central bank to again intervene in the 5.65 area.”