The strong showing for Milei's LLA party in Argentina's mid-term elections last Sunday has led to a sharp improvement in sentiment and should ease pressure on the peso in the near-term. But the risk is that authorities cling on to the current exchange rate regime for too long, which would result in further peso overvaluation and leave the currency at risk of a bigger, and potentially disorderly, fall further down the line. Elsewhere, while Brazil could be the biggest loser from China’s agreement to purchase more soybeans from the US, we doubt that the macro impact would be large.
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