A senior Trump administration official said on Wednesday a draft executive order that would withdraw the United States from NAFTA, that also includes Mexico and Canada, was under consideration, confirming an earlier report from Politico.

It is unclear whether the order would be enacted by Trump, who has said NAFTA undermines US jobs. Mexico-based factories have flourished under NAFTA and Mexico sends nearly 80 percent of its exports to the United States.

The peso shed more than 2 percent before paring losses slightly to trade down about 1.6 percent at 19.17 per dollar.

Concerns that Trump would pull out of NAFTA drove the peso to a record low in January. But the currency had rallied back as Mexican and US officials took a more constructive tone on trade since then.

The Brazilian real weakened more than 0.7 percent after lawmakers voted to water down austerity demands in a debt relief bill for states, fueling concerns over the government's fiscal agenda.

The lower house of Congress approved late on Tuesday scrapping a requirement that states increase charges on public employees to fund their pensions in exchange for suspending debt payments for three years.

The move invited worries President Michel Temer might find it harder than expected to gather support for a revamp of the country's bloated pension system, an overhaul at the center of his reform agenda.

Cutting public spending and curbing growth of public debt is seen as key to lifting Brazil out of its deepest recession on record.