The peso closed the session with an appreciation of 0.65% or 13.1 cents, trading around 19.94 pesos per dollar, with the exchange rate touching a maximum of 20.0991 and a minimum of 19.9012 pesos per dollar, a level not seen since February 15.
The appreciation of the peso was mainly due to two factors:
The publication of positive economic indicators in the United States. Retail sales in March exceeded market expectations, growing at a monthly rate of 9.8%, while industrial production grew at a monthly rate of 1.4% the same month, due to a rebound effect after the fall in industrial production in February due to the winter storm that affected the state of Texas.
Finally, the initial applications for unemployment support last week, stood at 576 thousand, its lowest level since the first two weeks of March 2020, prior to the initial impact of the pandemic.
All three indicators are evidence of the accelerated economic recovery in the United States, which raised the appetite for risk.
In the financial markets there is optimism due to the publication of the first quarterly reports corresponding to the first quarter, after in the last two days the results of the main banks in the United States have exceeded expectations.
In the capital markets, the Dow Jones closed 0.90% higher, the S&P 500 advanced 1.11% and the Nasdaq 100 advanced 1.61%, with all three indices reaching new all-time highs.
mieanwile, in Mexico, the IPC of the Mexican Stock Exchange was also dragged higher, with an increase of 0.38% during the session.
Exchange rate, bonds and the peso
In the foreign exchange market, the most appreciated currencies were all from emerging economies, with the Colombian peso advancing 1.65%, the South African rand 1.60%, the Chilean peso 1.09%, the Turkish lira 0.76%, the Mexican peso 0.65% and the Brazilian real 0.61 percent.
The weighted index of the dollar fell 0.11%, accumulating four sessions down with a decline of 0.61%, being to date the second largest weekly fall of the dollar in the year.
In the bond market, the 10-year Treasury bond yield rate closed with a drop of 6.7 basis points, reaching 1.56%, the highest daily decline since April 1, touching a low of 1.5268%, its lowest level since March 11.
The greatest demand for risk-free assets occurred despite the fact that positive economic indicators were published in the United States, which would normally have caused an increase in demand.
There are at least three explanations for the decline in rates of return in the session: 1) the global demand for bonds is recovering after sharp falls in prices during the first two months of the year and there is speculation of an increase in demand from from foreign institutions. 2) Today the White House announced the imposition of sanctions on Russia, which increases the risk of tensions between the two countries and 3) the market is assimilating the most recent comments from Fed officials, who have said that they are not considering increases in interest rates until 2024.
Regarding economic indicators, today at 9:00 p.m., the publication in China of GDP growth during the first quarter will be key, which is expected to be at a quarterly rate of 1.4% and an annual rate of 18.5 %, being the first country to register a rebound effect in its economic growth rate.
It should be remembered that China was the origin of the pandemic and its economy was affected during the first quarter, unlike other Western countries, which caused an annual contraction of 6.8% in the first quarter of 2020.
In the session, the euro touched a low of 1.1956 and a high of 1.1993 dollars per euro. Finally, the euro peso touched a minimum of 23.8176 and a maximum of 24.0765 pesos per euro.
At the close, the interbank quotes for sale stood at 19.9390 pesos per dollar, 1.3784 dollars per pound and 1.1967 dollars per euro.
Gabriela Siller; PhD
Director of Economic-Financial Analysis.