The peso (19.70 vs. dollar), energy demand and the EU-Iran agreement

The peso closed the session with an appreciation of 0.53% or 10.4 cents, trading around 19.70 pesos per dollar, with the exchange rate touching a maximum of 19.8576 and a minimum of 19.6998 pesos, a level not seen since January 21, when the exchange rate touched the minimum in the year of 19.5494 pesos per dollar.

The performance of the exchange rate indicates that the market is testing the support of 19.70 pesos that, if pierced, could lead to parity to the minimum in the year of 19.55.

Likewise, the appreciation of the peso in the first two sessions of the week is mainly the result of a lower perception of risk with respect to Mexico after the preliminary results of the midterm elections.

During the session, another factor that allowed the peso to appreciate was a strengthening of oil prices in the commodity market.

The WTI price closed the session with an increase of 1.39% at 70.19, hitting a new high for the year of $ 70.25 per barrel.

The prices of the main oil blends closed the session with gains, on the expectation that the supply of crude from Iran will not return in the short term.

According to US Secretary of State Antony Blinken, even if his country reaches a nuclear deal with Iran, hundreds of sanctions are expected to remain in place, including those imposed by the Trump administration.

Mexican peso

On the other hand, the expectation of a sustained economic recovery remains, which will continue to increase the demand for energy.

Among the main crosses of the dollar, the most appreciated currency was the Russian ruble with 0.79%, followed by the Mexican peso with 0.53% and the Malaysian ringgit with 0.16%. It is important to note that most currencies lost ground, while the dollar weighted index advanced 0.13 percent.

The strength of the dollar is due to the fact that the market is waiting for inflation in the United States corresponding to May, which will be published on Thursday morning and which is estimated to be around 4.8% per year.

Evidence of inflationary pressures could fuel speculation of a less flexible monetary stance in the United States.

Regarding economic indicators, in Mexico tomorrow the inflation for May is published, which Grupo Financiero Base estimates at an annual rate of 5.87% and a monthly rate of 0.18 percent.

In the session, the euro touched a minimum of 1.2164 and a maximum of 1.2194 dollars per euro.

For its part, the euro peso touched a minimum of 23.9785 and a maximum of 24.1827 pesos per euro.

At the close, the interbank quotes for sale stood at 19,7006 pesos per dollar, 1.4151 dollars per pound and 1.2173 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE