Mexican peso shines, Brazil's real flat amid fiscal worries

Mexico's peso rose more than 1pc on Wednesday, outperforming Latin American peers pressured by a stronger dollar, with fiscal concerns in Brazil weighing on the currency there.

The peso sought to make up for losses over the last three sessions and was poised for its best session in three weeks.

While it is on track to post its best quarter this year, the impact of rising coronavirus cases on a battered economy looms large.

Global sentiment, meanwhile, remained subdued as traders weighed the implications of a bad-tempered and indecisive debate overnight between US President Donald Trump and Democratic candidate Joe Biden.

"Risk appetite remains under pressure after Tuesday's tumultuous and discordant US presidential debate," said Ned Rumpeltin, European head of FX strategy at TD Securities.

"With the race in its final weeks, we think it will be very difficult for the FX market to make room for anything else," he said. "That is likely to leave the dollar choppy and highly changeable, but with a bias toward further recovery in the weeks ahead."

The dollar on Wednesday gained after recent losses, pushing the Chilean peso 0.6pc lower, while Colombia's currency was flat.

Volatile oil prices this quarter have weighed on the crude exporter's currency which is set to end about 3pc lower for the period.

Brazil's real traded flat to lower as official figures showed national debt rose to a new record of 88.8pc of gross domestic product and the public sector primary deficit in the 12 months to August, excluding interest payments, widened to 8.5pc of GDP.

This comes as a new fiscal aid package had raised worries about the government breaching its spending limit.

Separate data showed Brazil's unemployment rate rose to 13.8pc - the highest in at least eight years - as the coronavirus pandemic kept the labor market under pressure.

The real is among the worst-performing emerging market currencies this year, down close to 30pc. On the quarter, it is set to lose around 3pc, lagging most of its regional as well as broader emerging market peers.

Stocks in the region rose, in line with Wall Street, as upbeat factory activity data from China and US private payrolls rising more than expected in September lent weight to hopes of an economic recovery.

Sao Paulo's Bovepsa stock index climbed 1pc to lead gains among regional peers as iron ore miner Vale tracked prices of the steel-making ingredient higher.