The Brazilian real was on track to post its biggest percentage gain in six weeks on Monday as the dollar came under pressure ahead of a crucial parliamentary vote on Brexit, while Latin American stocks followed Wall Street lower.
The real jumped 1.2% to 4.19 per dollar, reversing much of this week's losses made on expectations of deeper interest rate cuts after a clutch of weak data. The currency was trading close to its 50-day moving average, which, if broken, could signal more gains for the real.
"We note that USDBRL flirted with the 4.19 level, but was once again unable to break 4.20, emphasizing the strong resistance at this level," Morgan Stanley analysts wrote in a note.
"We have started to see some other green shoots in the economy and the recent trade developments signal a potential improvement in the global environment."
Aiding positive moves in Latin American currencies, the dollar declined against a basket of major currencies as the euro found favor after Britain and the European Union clinched a deal on Thursday for an orderly British exit from the bloc.
However, doubts prevail about the proposed deal getting through the British parliament in Saturday's vote.
Mexico's peso hit a new 11-week high to resume its winning run for a seventh session in eight, with hopes of ratification of a trade deal between the United States, Canada and Mexico also playing into the mood.
Chile's peso hit its highest level in a month, while the Colombian peso rose despite weaker oil prices.
The Argentine peso was little changed. Recent opinion polls showed Peronist opposition candidate Alberto Fernandez should beat business-friendly incumbent Mauricio Macri in the Oct. 27 presidential election by enough to clinch a first-round win.
Regional stocks tracked Wall Street's lackluster moves as sentiment was dented by data showing the Chinese economy expanded at its weakest pace in almost 30 years, reinforcing global growth slowdown fears and reiterating the need for a US-China trade deal.
Brazil's Bovespa fell 0.2%. State-controlled lender Banco do Brasil SA jumped 3.5% after the bank said it had raised 5.836 billion reais ($1.39 billion) in a secondary share offering.
Those were offset by losses by miner Vale and other steelmakers due to weakness in Dalian iron ore prices.
Shares of Petroleo Brasileiro rose 0.2% after the state oil firm posted a significant production boost in the third quarter. In Mexico, conglomerate Alfa was among the worst performers on the IPC index after it reported double-digit drops in revenue and net profit for the third quarter.
State-run oil company Pemex on Thursday released details of how it will calculate its formula to hedge against upcoming sales of Maya crude, its flagship grade.
Pemex sets formulas that dictate the price at which Mexico's crude is sold worldwide.
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