Brazil's Real firmed for the first time this week, bouncing from last session's all-time lows, while most other Latin American currencies also strengthened on Friday on signs of easing tensions between the United States and China.
Beijing said Sino-U.S. trade negotiators had agreed to improve the atmosphere for the implementation of a Phase 1 deal, days after President Donald Trump threatened to impose new tariffs.
The last thing global investors need right now amid the global coronavirus pandemic is a one-two punch from spiking trade war risks, wrote Han Tan, market analyst at FXTM.
Data showing the U.S. economy lost fewer jobs in April than feared due to the coronavirus crisis also lifted sentiment, keeping the dollar at bay.
Brazil's Real rose 1.4% to 5.76 but the once unthinkable 6.00 to the dollar was still in sight. The currency plunged to new lows on Thursday after the central bank delivered a deeper cut in interest rates than expected.
The case for more cuts was made stronger on Friday by official figures showing inflation in April plumbed over 20-year lows.
The U.S.-China optimism filtered through to commodity markets, aiding gains in commodity-price reliant Latam markets.
Currencies of Mexico, Colombia and Chile all rose more than 1%.
Stocks followed suit, with those in Brazil in the lead. Sao Paulo's Bovespa index jumped 2% on broad-based gains. Mexican shares rose 0.9%, while Chilean shares extended gains to a fourth straight session.
In Argentina, markets were filled with uncertainty as the government's deadline for bondholders to agree to its debt restructuring offer was only hours away.
The twin economic and debt crises have driven a huge gap between the Argentine peso's official rate, kept almost static by capital controls, and tumbling black market and other unofficial rates.