The peso appreciates 16 cents against the dollar

The peso begins the session with an appreciation of 0.70% or 15.6 cents, trading around 22.29 pesos per dollar, in the face of a general increase in risk appetite in global financial markets, after yesterday, after the close, progress was announced in the development of a coronavirus vaccine.

The American pharmaceutical company Moderna, announced that its experimental vaccine against Covid-19, produced the expected antibodies in tests, so it hopes to advance to its last phase on July 27.

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases of the United States, indicated that the Moderna data are «quite promising» and despite having some side effects such as fatigue, headache and fever, they are not considered alarming.

On the other hand, it was announced that positive news about the vaccine in development will be published between the University of Oxford and AstraZeneca Plc, which according to the media also shows the production of antibodies against the virus.

Capital markets have reacted with the greatest optimism, registering an advance of 1.59% in Japan (Nikkei 225), while in Europe the main indexes register gains on average close to 2 percent.

For its part, in the United States, the futures market shows that the main indices will start with gains between 1.3 and 1.9 percent.

The peso and other currencies

In the exchange market, the gains against the dollar are also generalized, with the exception of the Swiss franc, which lost 0.21% as it is a safe-haven currency.

Among the most appreciated currencies are those of countries that produce raw materials and oil, such as the South African rand, which is up 1.44%, the Norwegian krone with 1.23%, and the Brazilian real, with 0.90 percent.

This is because the promise of a coronavirus vaccine fuels speculation that the economy could recover rapidly, in turn raising demand for raw materials.

The oil

In the commodities market, the WTI price starts with a 1.61% profit, trading at $ 40.94 per barrel.

In addition to optimism in the market, the price of oil rises due to the fact that the American Petroleum Institute reported a drop in inventories of 8.32 million barrels during the past week, which, if confirmed with official EIA data today, would be the biggest drop in inventories since December.

Indicators of Banxico

On the other hand, there is an expectation that at the OPEC + meeting, delegates from different countries will agree to reduce cuts in oil production gradually.

The exchange rate is expected to trade between 22.20 and 22.45 pesos per dollar. The euro began the session with an appreciation of 0.37%, trading at $ 1.1442 per euro, while the pound appreciated 0.63% and was trading at $ 1.2632 per pound.

Money and debt market

In the United States, the yield on 10-year Treasury bonds increases 3.1 basis points, at a rate of 0.65%, while in Mexico the yield on 10-year M bonds decreases 0.6 basis points, to 5.63 percent.

Derivatives market

To hedge against a depreciation of the peso beyond 23 pesos per dollar, a call option, with an exercise date within 1 month has a premium of 1.46% and represents the right but not the obligation to buy dollars in the level mentioned above.

On the other hand, the interbank forward for sale is at 22.3513 at 1 month, 22.7588 at 6 months and 23.2232 pesos per dollar at one year.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE