The peso (19.91 vs. dollar) and OPEC oil demand forecast

The Mexican peso closed the session with an appreciation of 0.30% or 6.0 cents, with the exchange rate trading close to 19.91 pesos per dollar.

The behavior of the weight in the session can be divided into two stages:

During the overnight, the peso depreciated, with the exchange rate reaching a maximum of 20.0229 pesos per dollar, due to a general strengthening of the US dollar.

This behavior was due to an extension of what happened yesterday in the western markets, when it began to speculate that the Federal Reserve could consider starting to exit its broadly flexible monetary stance.

On the other hand, as liquidity returned to western markets in the morning, a change in the trend in the exchange rate was observed, mainly due to three factors:

First factor

The opening of some markets of emerging and Latin American economies, whose currencies started the session with gains against the dollar.

In fact, in the broad basket of major crosses, the Mexican peso was the seventh best performing currency. The first 7 were the South African rand (+ 1.72%), the Brazilian real (+ 1.38%), the Chilean peso (+ 1.16%), the Peruvian sol (+ 1.04%), the Russian ruble (+ 0.57%), the Colombian peso (+ 0.45%) and the Mexican peso (+0.30 percent).

After the Mexican peso, the Canadian dollar was located (+0.28 percent).

Second factor

The currencies of commodity-producing countries advanced due to the increase in oil prices.

The WTI closed the session with an increase of 1.42% trading at 68.68 dollars per barrel, touching a new high in the year of 69.00 dollars.

This is because optimism continues after OPEC and its allies (OPEC +) gave a positive expectation of hydrocarbon demand in Tuesday’s session, while they decided to maintain their plan to gradually increase supply.

Likewise, the signs of a recovery in demand are given before the start of the summer season where gasoline consumption from the United States to Europe is expected to increase.

Third factor

In the bond market, there was a decrease in the yield rate of the 10-year Treasury bonds of 1.9 basis points, standing at 1.59 percent.

The above also caused the dollar to erase the morning’s gains, as the weighted index closed with a retracement on the day of 0.03 percent.

This may also be due to caution, since tomorrow the ADP employment survey is published, which is estimated to show the creation of 650 thousand jobs during May, similar to the market estimate for the non-farm payroll for May that is published on Friday in the morning.

The mexican peso

During the session, Banco de México released its quarterly report, where it revised up its inflation forecast for the end of 2021 from 3.6% to 4.8%, while the forecast for 2022 showed little change, observing a convergence towards the objective 3% in the second quarter.

Regarding growth, the central scenario was adjusted up from 4.8% to 6.0%, with a range between 5.0 and 7.0%. For 2022, the growth forecast is at 3%, with a range between 3.0 and 4.0 percent.

The exchange rate did not have any reaction to the publication of this information.

In the session, the euro touched a minimum of 1.2164 and a maximum of 1.2227 dollars per euro.

For its part, the euro peso touched a minimum of 24.2832 and a maximum of 24.4173 pesos per euro.

At the close, interbank prices for sale stood at 19,9064 pesos per dollar, 1.4171 dollars per pound and 1.2212 dollars per euro.

 

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE