Which is better merino wool or peruvian highland wool?

It depends on what you're looking for. Merino wool is incredibly soft, and has a nice light hand, but it tends to be fragile. It doesn't always wear well, and is prone to fuzzing and pilling. It's lovely when softness is the main consideration, like for a scarf or baby items. But make an active boy a sweater of it, and the thing will be all pills and holes in no time at all. Peruvian Highland sheep are a cross between Merino (for the softness) and Corriedale (for durability.) You get a wool that is stronger and more durable, without losing too much in softness. It's a good all purpose wool, but not butter-soft like the merino.