Mexico's peso and Brazil's real firmed on Friday after strong US consumer confidence data and news China could step up foreign investments, but jitters about Europe's debt crisis could limit further gains. Latin American currencies mostly tracked a rebound in the euro after Reuters reported China's central bank planned to create an investment vehicle to manage funds in the United States and Europe worth $300 billion.
News that US consumer sentiment rose to its highest in six months in early December also supported bids for riskier assets. Investors nevertheless remained wary after a summit of Europe's leaders failed to deliver a big increase in the region's rescue funds to tackle a widening debt crisis.
European Union leaders agreed on a plan to toughen the region's budget rules. But investors are still hoping to see signs the European Central Bank (ECB) or the International Monetary Fund (IMF) are prepared to back European economies with more bailout cash.
Analysts said gains in riskier assets, such as emerging market currencies, could reverse without further signs that Europe has enough funds on hand to stave off another global financial crisis due to its debt troubles. Mexico's peso firmed 0.96 percent to 13.58 per dollar. The cost of dollars in pesos snapped back to its 50-day simple moving average after slumping past that level in the previous session.
If the cost of dollars in pesos keeps falling below that average, that could suggest the peso could mount further gains. The peso slipped to a 2-1/2 year low last week. Brazil's real bid 0.65 percent firmer at 1.8049 per dollar while Chile's peso dipped 0.29 percent to 509.50 per dollar.