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The Mexican peso gains 12.5 cents against the dollar

The peso starts the session with an appreciation of 0.60% or 12.5 cents, trading around 20.82 pesos per dollar, with the exchange rate touching a minimum of 20.8015 and a maximum of 20.9711 pesos.

Mexican peso is the most appreciated currency in the broad basket of main crosses, followed by the Russian ruble with 0.53%, the South African rand with 0.49%, the Turkish lira with 0.36% and the Brazilian real with 0.19%.

In general, the appreciation this morning of the currencies of emerging economies is only the result of a correction to Wednesday’s losses, after the exchange rate respected the resistance of 21.00 pesos per dollar.

The appreciation of the peso is also supported by a moderate downward correction in interest rates on Treasuries.

The 10-year bond rate fell 2.2 basis points and is close to 1.45 percent.

Market participants are waiting for a Jerome Powell lecture scheduled for 11:05 a.m. on the economic situation, where it is likely to reiterate the continuity of monetary stimuli for a prolonged period of time.

It is not clear what the reaction of the financial markets will be to their comments, since in recent weeks their observations in favor of maintaining a flexible monetary stance have a very short-term effect on the behavior of the bond market and it seems that the participants of the The market is attentive to the evolution of economic indicators that point to an accelerated economic recovery.

The peso

An additional factor that could renew the upward pressure on Treasury bond rates is the likely approval in the coming days of fiscal stimulus in the United States Senate.

It should be added that the United States Capitol received warnings of a possible attack by extremists on March 4.

Therefore, the vote on the new stimulus package is likely to be delayed until the weekend.

The oil

In the raw materials market, prices remain stable, mainly energy, with the WTI advancing 0.34% and trading at 61.49 dollars per barrel.

Today is key for the immediate future of oil prices, as the meeting between OPEC and its allies (OPEC +) will be held where it is expected that an increase in oil production between 1 and 1.5 million will be allowed. barrels per day as of April.

The reaction of the oil price will depend on the expected growth of the oil supply after the meeting.

Working market

Regarding economic indicators, in the United States during the week that ended on February 27, 745 thousand new applications for unemployment support were reported, below the 750 thousand expected by the market and increasing by 9 thousand with respect to the week previous.

Continuous applications for unemployment support, from those who are already receiving support or continue to wait, decreased from 4,419 to 4,295 million.

During the session and tomorrow, other economic data will be published that, if positive, could resume upward pressure on Treasury bond rates.

At 9:00 am the US factory orders for the month of January are published, while tomorrow at 7:30 am the non-farm payroll and the unemployment rate for February are published.

The market anticipates that a creation of 200 thousand job positions will be published.

During the session, the exchange rate is expected to trade between 20.69 and 20.99 pesos per dollar. The euro starts the session with a depreciation of 0.26%, trading at 1.2032 dollars per euro, while the pound loses 0.02% and is trading at 1.3951 dollars per pound.

Money market and debt

In the United States, the yield on the 10-year Treasury bonds remains unchanged, at 1.48%, while in Mexico the yield on the 10-year M bonds increases by 2.0 basis points, at a rate of 6.14 percent.

Derivatives market and the peso

To hedge against a depreciation of the peso beyond 22 pesos per dollar, a purchase option (call), with an exercise date within 1 month has a premium of 1.04% and represents the right but not the obligation to buy dollars in the aforementioned level.

On the other hand, the interbank forward for sale is at 20.9029 at 1 month, 21.2392 at 6 months and 21.6725 pesos per dollar at one year.

 

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE

 

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