The peso starts the session with an appreciation of 0.84% or 17.6 cents, trading around 20.72 pesos per dollar, with the exchange rate touching a minimum of 20.7002 and a maximum of 20.9275 pesos.
From a technical point of view, the possibility is open for the peso to continue recovering ground towards the level of 20.40 pesos per dollar in the short term.
In the bond market, for the third consecutive session the interest rate in the secondary market is falling, with the yield on the 10-year Treasury bonds showing a decline of 3.4 basis points, reaching 1.48 percent.
The movements in the rate of return on Treasury bonds are what have caused volatility in financial markets in the last two weeks.
In particular, in the foreign exchange market, where the exchange rate in Mexico reached a maximum of 21.63 pesos per dollar due to a significant rise in the interest rate of these bonds.
Today, the auction of 24 billion dollars of 30-year Treasury bonds will be relevant, the results of which will be announced at 12:00 hours. Strong demand, as happened yesterday with the 10-year bond auction, increases the probability that the dollar will continue to weaken.
The stability in the bond market is associated with the inflation data for the United States published yesterday, which was in line with market expectations.
Likewise, we are waiting for the monetary policy announcement from the Federal Reserve, on March 17th. Although the statement is expected to show a flexible monetary stance, it will be the first time since December 16 that updated projections of economic growth, unemployment rates, inflation and the path expected by the Fed for the interest rate have been published.
On the other hand, the European Central Bank () kept its interest rates unchanged, as well as the bond purchase program that was launched after the pandemic for 1.85 trillion euros, with an expiration date in March 2022.
The ECB announced that it will significantly increase the pace of asset purchases during the first months of the year, with the aim of preventing upward movements in rates in the secondary market.
The move sends a signal that central banks can take action to contain the recent rise in interest rates and contributes to the appreciation of the Mexican peso this morning.
Regarding economic indicators, in the United States during the week that ended on March 6, 712 thousand new applications for unemployment support were reported, below the 725 thousand expected by the market and decreasing by 42 thousand with respect to the week previous.
Continuous applications for unemployment support, from those who are already receiving support or continue to wait, decreased from 4,337 to 4,144 million. This implies that the labor market in the United States continues to recover.
On the other hand, in Mexico, the sales of the National Association of Self-service and Department Stores (ANTAD) registered a nominal annual decline of 1.5% in February, after falling 8.2 in January.
ANTAD sales add up to three consecutive months of setbacks, which coincides with the strengthening of sanitary measures in several states of the country as of December.
However, the lower annual drop in February compared to January is indicative of a monthly recovery in consumption in self-service and department stores.
During the session, the exchange rate is expected to trade between 20.58 and 20.82 pesos per dollar.
The euro starts the session with an appreciation of 0.23%, trading at 1.1956 dollars per euro, while the pound advances 0.19% and is trading at 1.3958 dollars per pound.
Money market and debt
In the United States, the yield on the 10-year Treasury bonds remains unchanged, at 1.51%, while in Mexico the yield on the 10-year M bonds decreases by 1.4 basis points, at a rate of 6.25 percent.
Derivatives market and the peso
To hedge against a depreciation of the peso beyond 21 pesos per dollar, a purchase option (call), with an exercise date within 1 month has a premium of 2.12% 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 20.8241 at 1 month, 21.1709 at 6 months and 21.6044 pesos per dollar at one year.
Gabriela Siller; PhD
Director of Economic-Financial Analysis.