The peso (20.14 vs. dollar) and employment survey in the United States

The peso closed the session with a depreciation of 1.23% or 24.4 cents, trading around 20.14 pesos per dollar, with the exchange rate touching a minimum of 19.8974 and a maximum of 20.1637 pesos, not seen since May 13.

The depreciation of the peso was the highest in one day since March 23, as a consequence of the following factors:

First factor

The US dollar strengthened 0.68% according to the weighted index, being its biggest advance since April 30, driven by the expectation of a less flexible monetary policy.

On the one hand, Federal Reserve officials have ruled in previous days on the importance of beginning to discuss reductions to the bond purchase program.

On the other hand, today several economic indicators were published that support a sustained economic recovery in the United States.

The Automatic Data Processing (ADP) employment survey was published, which estimated that 978 thousand job positions were created during May, well above the market’s expectation of 650 thousand jobs.

On the other hand, initial applications for unemployment support decreased by 20 thousand compared to the previous week, reaching 385 thousand units.

This is the first time since March 14, 2020 that initial applications have fallen below the 400,000 level, a sign that the recovery in the labor market continues.

Finally, at 9:00 am, the ISM indicator for services for May was published, which stood at a level of 64 points, its highest level on record.

Second factor

Risk perception rose globally. In the session, the Global Risk Perception Base Indicator (PPI) stood at 563 units, which means high risk perception.

Within the indicator, the components of the commodities, currencies and capital markets showed consistent results with greater nervousness.

In the United States, the yield rate on 10-year Treasury bonds rose 3.6 basis points to 1.62%, its largest daily increase since May 12.

This is partly due to the expectation of a Federal Reserve with a less flexible monetary stance. However, news that Russia will withdraw dollar assets from the backup fund for the country’s pension system also played a role.

Also, in the morning the capital markets lost with the news that the United States redoubled efforts to prevent American companies from investing in companies in the technology sector associated with the Chinese military.

In the United States, capital market losses were concentrated in the technology sector.

The mexican peso

It should be noted that the US capital markets cut part of their losses after the president of the United States proposed to Republicans to set a minimum corporate tax rate of 15%, leaving aside the original proposal to raise the general corporate tax rate of the United States. 21 to 28%.

This mainly favored companies in the industrial sector in the capital market.

In the foreign exchange market, the most depreciated currencies were the New Zealand dollar (-1.37%), the Turkish lira (-1.36%), the Peruvian sol (-1.26%) and the Australian dollar (-1.24%).

In the session, the euro touched a minimum of 1.2118 and a maximum of 1.2214 dollars per euro.

For its part, the euro peso touched a minimum of 24.2828 and a maximum of 24.4529 pesos per euro.

At the close, the interbank quotes for sale stood at 20.1430 pesos per dollar, 1.4105 dollars per pound and 1.2127 dollars per euro.

 

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Baco BASE