The peso starts the session with a moderate appreciation of 0.22% or 4.5 cents, trading around 20.38 pesos per dollar, with the exchange rate touching a minimum of 20.3777 and a maximum of 20.4971 pesos.
The appreciation of the peso is due to a downward correction after losing ground for five consecutive sessions.
It is worth mentioning that in the foreign exchange market, currencies show a mixed performance with little change, while the dollar weighted index shows no variations compared to yesterday’s close.
The foregoing is due to the scarcity of relevant economic information, mainly in the United States, where economic information will not be published.
It is worth mentioning that, although today is not a holiday for the financial markets in the United States, the recent confirmation by President Joe Biden of June 19, Emancipation Day (Juneteenth), as a holiday at the federal level, It could prevent several private sector companies and even the financial sector from operating on this day in the following years, something that has not yet been defined.
The mexican peso
Yesterday the Securities and Exchange Commission (SEC) announced that it will not work today, the same was announced for the Federal Reserve offices that will be closed today, although financial services of the Fed will operate normally.
This is likely to imply a moderate decrease in liquidity in financial markets during the American session.
In the foreign exchange market, the most depreciated currencies are the Norwegian krone (-0.83%), the Swedish krona (-0.42%), the New Zealand dollar (-0.39%) and the Australian dollar (-0.38%), mostly foreign currencies. raw material producing countries.
This morning, the price of oil shows a decline of 0.62%, trading at 70.60 dollars per barrel, the result of a downward correction after gaining ground in previous weeks.
In the bond market there is also a downward correction, with the 10-year bond rate showing a decline of 3 basis points to 1.47%, accumulating a decline of 10 basis points in the last two sessions.
Finally, in the capital market, the main indices lost in Europe, with average declines close to 0.89%, where the FTSE 100 in London stands out, which falls 1.13% and the DAX in Germany with a decline of 1.01 percent.
The Fed and Inegi
Losses are also seen in the US futures market, with the Dow Jones falling 0.67% and the S&P 500 falling 0.73 percent.
The losses are associated with the expectation that the Federal Reserve will continue to adopt less flexible language on the future of monetary policy, after last Wednesday’s announcement. The expectation of less monetary stimulus increases the probability of losses in the capital markets.
Regarding economic indicators, INEGI published the Global Supply and Demand corresponding to the first quarter of 2021, which showed a real quarterly increase of 2.0% according to seasonally adjusted figures, being the third consecutive increase after advancing 5.1% in the last quarter of 2020.
Within global demand, the greatest increase was observed in gross fixed capital formation, increasing 5.3% quarterly, higher than the 3.8% increase observed in the previous quarter.
Private consumption increased at a quarterly rate of 2.9%, spinning up three quarters, a sign that the recovery in domestic demand continues.
Likewise, government spending contributed positively to growth, increasing slightly by 0.5%, after the decline of 0.2% observed in the fourth quarter of 2020.
Automotive industry and peso
Finally, exports of goods and services showed a quarterly contraction of 3.3%, after having increased for two consecutive quarters. It should be remembered that, during the first part of the year, the shortage of semiconductors limited the production of the automotive industry, one of the main export industries in Mexico.
In annual terms, the Global Supply and Demand showed a contraction of 2.9%, according to original figures, spinning six quarters of annual contractions and thus registering the longest period of consecutive annual setbacks since the series began in 1993.
Within demand, the component that shows the greatest lag is that of gross fixed capital formation (-4.9% per year), spinning down eight quarters (since the second quarter of 2019). Exports and private consumption show annual declines of 4.3% and 4.2%, respectively.
Finally, government spending is the one that shows the least contraction (-0.7%), after having increased for four consecutive quarters.
During the session, the exchange rate is expected to trade between 20.28 and 20.52 pesos per dollar.
The euro starts the session with a depreciation of 0.15%, trading at 1.1889 dollars per euro, while the pound loses 0.45%, settling at 1.3859 dollars per pound.
Money and debt market.
In the United States, the 10-year Treasury yield remains unchanged, at 1.51%, while in Mexico the 10-year M bond yield remains unchanged, at a rate of 6.76 percent.
Derivatives market and the peso
To hedge against a depreciation of the peso beyond 20.70 pesos per dollar, a purchase option (call), with an exercise date within 1 month has a premium of 1.76% 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 20.5333 at 1 month, 20.9121 at 6 months and 21.4219 pesos per dollar at one year.
Gabriela Siller; PhD
Director of Economic-Financial Analysis.