* Brazil central bank improves 2023 GDP growth forecast to 2.0% * Argentina to use yuan in $2.7 bln IMF payment - sources * Mexico's economic outlook uncertain, say finance officials * Chile unemployment rate 8.5% in quarter through May * Brazil c.bank chief signals support for changing inflation target time frame (Updated at 1850 GMT) By Shreyashi Sanyal and Bansari Mayur Kamdar June 29 (Reuters) - Currencies in Latin America slipped on Thursday as strong U.S. labor market data and hawkish comments from U.S. Federal Reserve Chair Jerome Powell lifted the dollar, while Colombia's peso led regional losses a day ahead of its central bank's rate decision. The U.S. dollar reacted positively after U.S. data showing persistent labor market strength cemented the case for further rate hikes by the Fed. Also helping the currency, Powell on Wednesday did not rule out a rate increase at the July meeting, noting that more rate hikes were coming from the central bank. The MSCI's index for Latin American FX crawled 0.1% lower, while the dollar index hit a two-week high. Colombia's peso weakened 0.8% to 4177.7 against the dollar. Investors are now bracing for an interest rate decision by Colombia's central bank on Friday, where it is widely expected to hold its rate steady, ending nearly two years of rate rises meant to contain inflation. "After 1150bps in hikes since September 2021, we expect BanRep (Colombian central bank) to end its hiking cycle and leave the policy rate at 13.25%, an expectation in line with analysts' consensus and market expectations," economists led by Sergio Olarte at Scotiabank wrote. Data pointing to cooling inflation, especially in Brazil and Chile, has spurred bets of rate cuts in Latin America, where central banks have led some of the most aggressive tightening over the last two years. The Brazilian real slipped 0.2%, with the focus on the National Monetary Council (CMN), the country's top economic policy body, meeting later to set its 2026 inflation target. Brazil's central bank chief Roberto Campos Neto indicated he supported adopting a continuous time frame for the monetary authority to pursue inflation targets, ditching the current system of tracking a calendar year. The central bank also improved Brazil's 2023 GDP growth forecast to 2.0% Data showed Chile's unemployment rate hit 8.5% in the March-May period, just below market consensus and down from 8.7% in the quarter through April. The peso eased 0.2%. Argentina's peso firmed 1.4% in parallel markets. The country, battling a scarcity of dollars, will make payments worth some $2.7 billion to the International Monetary Fund this week, two official sources with direct knowledge said. Peru's sol climbed 0.1%, while Mexico's peso was flat. Mexico's financial system stability committee described the country's economic outlook as uncertain, citing persistent risks of further weakening of economic activity stemming from a complex external environment. Elsewhere, Pakistan's finance minister said a staff level agreement for a crucial bailout deal with the IMF was "very close" and expected in the next 24 hours. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 986.33 -0.58 MSCI LatAm 2429.93 0.71 Brazil Bovespa 118125.68 1.24 Mexico IPC 53471.18 0.02 Chile IPSA 5714.90 1.02 Argentina MerVal 415764.90 1.499 Colombia COLCAP 1135.27 0.7 Currencies Latest Daily % change Brazil real 4.8608 -0.23 Mexico peso 17.0993 -0.17 Chile peso 802.4 -0.26 Colombia peso 4177.7 -0.75 Peru sol 3.6246 -0.29 Argentina peso (interbank) 256.2000 -0.12 Argentina peso (parallel) 489 1.43 Stock indexes Latest Daily % change MSCI Emerging Markets 986.55 -0.56 MSCI LatAm 2427.14 0.59 Brazil Bovespa 118026.0 1.15 6 Mexico IPC 53542.43 0.15 Chile IPSA 5692.51 0.63 Argentina MerVal 411069.4 0.353 0 Colombia COLCAP 1132.56 0.46 Currencies Latest Daily % change Brazil real 4.8614 -0.24 Mexico peso 17.1092 -0.23 Chile peso 801.5 -0.15 Colombia peso 4186.6 -0.96 Peru sol 3.6235 -0.26 Argentina peso (interbank) 256.2500 -0.14 Argentina peso (parallel) 488 1.64 (Reporting by Shreyashi Sanyal and Bansari Mayur Kamdar in Bengaluru; Editing by Andrew Heavens and Alison Williams)
