RIO DE JANEIRO: Latin American currencies edged up on Wednesday on better-than-anticipated US housing data and hopes that China, the region's top trading partner, would publish healthy economic growth numbers on Thursday.
Mexico's peso led gains, rising 0.2 percent to 12.7925 per dollar, as data showed US housing starts surged in September to their fastest pace in more than four years.
The US numbers also improved the economic outlook for Mexico, which sends nearly 80 percent of its exports to its northern neighbor.
Investors remained cautious about the global economic outlook, however, as Germany cut its growth forecast for 2013 to only 1 percent. Anxiety about a possible bailout request by Spain was also on the rise ahead of a summit of EU leaders in Brussels on Thursday and Friday.
Spain got some breathing room after ratings agency Moody's affirmed its investment grade rating, assuaging widespread fears that the country would be cut to junk rating.
Still, Moody's assigned a negative outlook to Spain's ratings, cautioning that Madrid would need help from the European Union and the European Central Bank to maintain market access at reasonable rates, adding pressure on the government to request a bailout.
"Markets are trading in positive territory, celebrating that Spain was not downgraded. The euro is gaining and that is boosting emerging market currencies," said Rodrigo Sarria, a currency trader at Celfin Capital in Santiago.
In Brazil, however, the real was little changed at 2.0332 per dollar as investors grew wary of a possible central bank intervention if the currency gets any closer to the level of 2 per dollar, which the central bank has aggressively defended for the past few months.
"Liquidity drops significantly as the real nears the levels where the central bank has intervened," said Alfredo Barbutti, chief economist at BGC Liquidez brokerage in Sao Paulo.
Latin American markets could get a boost on Thursday if China's third-quarter gross domestic product comes in roughly in line with expectations.
Economists forecast the country to have grown around 7.4 percent in the past quarter, and hopes for strong data increased after Premier Wen Jiabao was quoted by local media as saying the government is confident of achieving its 2012 growth target of 7.5 percent.
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