EMERGING MARKETS-Latam FX sinks as dollar holds high after Fed

* Mexican peso, Brazilian real down more than 1% * Fed holds policy unchanged * Weak FDI data hurts Brazil's real * Chilean c.bank expected to stand pat on rates (Updates after Fed decision) By Ambar Warrick and Susan Mathew Jan 27 (Reuters) - Mexico's peso and Brazil's real lost more than 1% on Wednesday as the dollar held gains after the U.S Federal Reserve kept its policy unchanged. The Fed left its key overnight interest rate near zero and made no change to its monthly bond purchases, noting the pace of the recovery in economic activity and employment in the United States from a pandemic induced trough has moderated in recent months. The expected decision caused minimal moves in currencies, with the dollar at its best percentage gain in two weeks, while Mexico's peso lost 1.3%, having pulled slightly back from one-month lows hit earlier in the session. "I think if anything the dollar is finding support from the Fed's more cautious message," said Joe Manimbo, senior market analyst, Western Union Business Solutions, Washington. "Its more that the 'risk off' move today has gained traction in the Fed's more cautious outlook for growth." Brazil's real slid 1.5% with weak foreign direct investment data weighing, while top copper producer Chile's peso extended losses to a fourth straight session as declining prices of the red metal added to the currency's woes. Chile's central bank is expected to hold interest rates at ultra-low levels at its meeting on Wednesday. "The bank will mention that the economic recovery is ongoing, but that the balance of risks remain biased to the downside considering the uncertainty regarding the pandemic," Credit Suisse analysts wrote in a note. In line with Wall Street, most main Latam stocks indexes fell, with Colombia's COLCAP hitting its lowest in more than a month. Brazil's Bovespa, meanwhile, broke a five-day losing streak with oil stocks and financials leading losses. Cielo SA was the top gainer on the index after the payments processor unveiled plans to launch a credit business this year, while also looking at the sale of non-core assets. Key Latin American stock indexes and currencies: Stock indexes Latest Daily % change MSCI Emerging Markets 1372.71 -1.16 MSCI LatAm 2350.30 -1.48 Brazil Bovespa 117265.05 0.69 Mexico IPC 44302.58 -1.67 Chile IPSA 4418.21 -1.77 Argentina MerVal 50188.19 1.464 Colombia COLCAP 1373.98 -2.02 Currencies Latest Daily % change Brazil real 5.4022 -1.47 Mexico peso 20.2490 -1.41 Chile peso 739.3 -0.96 Colombia peso 3604.13 0.21 Peru sol 3.6438 0.00 Argentina peso 87.1100 -0.10 (interbank) (Additional reporting by Karen Brettell in New York; editing by Diane Craft)