The peso advances against the dollar at 19.84 units

The peso begins the session with an appreciation of 0.46% or 9.3 cents, with the exchange rate trading around 19.84 pesos per dollar, after reaching a minimum of 19.8182 and a maximum of 19.9486 pesos.

In the rest of the exchange market, the dollar weakens against its main crosses, mainly due to a downward corrective movement.

In Thursday’s session, some financial markets had an episode of volatility, after a US media leaked a proposal by President Joe Biden to increase the capital gains tax, from 20% to about 40 percent.

This tax could increase based on taxpayer income, which, along with state tax rates, could add up to more than 50% for some investors in states like California.

The note cited sources with knowledge of the matter, anonymous, so today’s movement suggests that the market could be waiting for an official statement.

The peso

In fact, in the exchange market, the Mexican peso returns close to the levels of yesterday morning, between 19.80 and 19.90 pesos, as well as the weighted index of the US dollar, which returns to yesterday’s minimum overnight, between 1,129 and 1,130 points.

One factor that may be contributing to this weakening of the dollar is the publication of preliminary estimates of the PMI indices, corresponding to April.

In Japan, the Eurozone, Germany, France, and the United Kingdom, the manufacturing and services indices were above the expansion threshold of 50 points.

In the case of the Eurozone manufacturing PMI (63.3), it was a new record high in the series that begins in June 1997, while the UK manufacturing PMI (60.7) had its highest reading since July 1997. 1994.

Internal trade

In Mexico, the INEGI published the results of the Monthly Survey of Commercial Companies (EMEC) corresponding to the month of February 2021, which show that the income from the supply of goods and retail services grew 1.6% in the month, with which registers an annual rate of -3.8%, the lowest annual contraction since March of last year.

Within the indicator, at a monthly rate, the only two subsectors that fell were health care items (-3.5%) and household goods, computers and items for interior decoration (-0.3%).

On the other hand, the remaining 7 subsectors showed monthly growth, highlighting those of textile products, costume jewelery and clothing (5.8%), stationery articles, for entertainment, and articles for personal use (5.1%), self-service and department stores (4.0%) and internet sales (1.7 percent).

At an annual rate, only four subsectors show positive rates: internet sales (62.3%), health items (9.1%), hardware, tlapalería and glass (5.0%) and self-service and department stores (0.2 percent).

The rest of the sectors still show high contractions, as the recovery has been heterogeneous in the tertiary sector, especially due to restrictions on some activities, as well as a restructuring of household spending focused on more essential expenses or household expenses.

Retail sales are expected to finish their recovery as consumers regain confidence in handling the pandemic and perceive an improvement in their economic situation, as there is still a stagnation of the economy, a high widespread unemployment rate and the once an upward trend inflation.

Services and peso

On the other hand, the Monthly Survey of Services (EMS) showed a real monthly increase of 2.59% in total income from the supply of goods and services during February, resuming its recovery after a monthly drop of 6.40 percent was observed in January. .

The increase is due to an improvement in epidemiological conditions, recalling that at the end of February only two states remained on a red light.

In annual terms, the total income of the services sector shows a contraction of 11.91%, spinning 15 months of consecutive setbacks, a period still smaller than the 16 annual falls observed in the previous crisis, from January 2009 to April 2010.

As of the second month of 2021, income from services continues to be 10.56% below the pre-pandemic level (March), evidence of the difficulty that this sector has faced in achieving a recovery.

During the session, the exchange rate is expected to trade between 19.78 and 19.99 pesos per dollar.

The euro starts the session with an appreciation of 0.44%, trading at 1.2068 dollars per euro, while the pound gains 0.35% and is trading at 1.3888 dollars per pound.

Money market and debt

In the United States, the yield on the 10-year Treasury bonds increased by 1.0 basis point, to 1.55%, while in Mexico the yield on the 10-year M bonds remained unchanged at 6.79 percent.

Derivatives market and the peso

To hedge against a depreciation of the peso beyond 20.00 pesos per dollar, a purchase option (call), with an exercise date within 1 month has a premium of 1.74% 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 19.8832 at 1 month, 20.2358 at 6 months and 20.6958 pesos per dollar at one year.

 

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE