Latin American currencies strengthened on Friday after weaker-than-expected US economic data reduced bets on a third US interest rate increase this year, with Mexico's peso gaining to its strongest level against the dollar in 14 months. US consumer prices were unchanged in June and retail sales fell for a second straight month, the latest in a run of mixed reports that have kept traders skeptical about the Fed's stated plan for one more rate hike this year and three in 2018.
A slower pace of policy tightening could boost the allure of high-yielding emerging market assets, driving up the value of their currencies. The Mexican peso strengthened against the dollar for the seventh straight day to reach its strongest since May 2016, while the Brazilian real firmed 0.8 percent.