The peso starts the session with a depreciation of 0.68% or 13.8 cents, trading around 20.43 pesos per dollar, with the exchange rate touching a minimum of 20.2556 and a maximum of 20.4589 pesos.
With the above, the peso accumulates a depreciation of 2.29% or 45.8 cents in the week and the exchange rate is at its highest level since December 21.
The exchange market once again shows a strengthening of the US dollar, with the weighted index advancing 0.24% and reaching its highest level since December 23, which seems to confirm a pause in the downward trend of the dollar that began in April of 2020.
For now, the Mexican peso is the sixth most depreciated currency in the session and the third most depreciated in the week.
The perception of risk continues in global financial markets due to the slow distribution of vaccines and the negative effect of the coronavirus pandemic on economic activity in the first quarter.
Although yesterday Fed Chairman Jerome Powell reiterated the need to maintain a highly accommodative monetary policy stance, he also said that US economic activity has moderated, which, far from sending a positive signal, has contributed to the strong downward corrections in the capital market, raising the perception of risk in other markets.
Another factor that influences the negative performance of the capital market in the United States has been the reaction of institutional investors to the operations of minority investors, which during the last year have increased their participation in the volume of operations.
The peso and GDP of the United States
In the capital markets, the main indices in Asia closed with strong losses, with the Nikkei 225 losing 1.53% and the Hong Kong Hang Seng losing 2.55%. In Europe the main indices show widespread losses, with London’s FTSE 100 falling 0.84% and Germany’s DAX advancing 0.62 percent.
Likewise, in the United States, the futures market shows a mixed performance, although losses could be observed in companies in the technology sector, as the Nasdaq shows a decline in the futures market of around 0.73 percent.
Regarding economic indicators, in the United States, GDP grew at an annualized quarterly rate of 4.0% during the last quarter of the year, after having grown 33.4% in the previous quarter.
The above is equivalent to a quarterly rate of 1.0%. At an annual rate, the GDP contracted 2.5%, with which in the year the United States economy averaged a fall of 3.5 percent.
This is the first average annual contraction since 2009 when it fell 2.5% due to the Great Recession and the largest since 1946, when a contraction of 11.6 percent was observed.
By component, consumption represented 1.70 percentage points of the 4.00 points of annualized quarterly growth, while investment contributed 4.06 points.
Exports subtracted 1.52 points from GDP in the fourth quarter. Going forward, it is expected that the approval of greater fiscal stimuli, in conjunction with an effective vaccination process, will allow the US economy to grow 5.0% during 2021.
In the United States, the weekly employment report was also published, which showed that new applications for unemployment support corresponding to the week that ended on January 23, were located at 847 thousand units, decreasing by 67 thousand compared to last week .
On the other hand, continuous requests, from those people who are already receiving support or who continue to wait, decreased from 4,974 to 4,771 million.
In Mexico, the Trade Balance of merchandise registered a surplus of 6.262 million dollars during December according to original figures, marking a new record high and the fifth in the year.
With this, in 2020 trade balances registered a surplus of $ 34.476 million, being the highest on record.
The historical trade surplus was due to the fact that during the second half of the year external demand showed greater strength relative to domestic demand, as demand for imports of consumer goods and capital fell.
In original figures, exports showed an annual fall of 9.3% during 2020, while imports contracted 15.8 percent.
In December, exports showed a monthly growth of 3.43% according to seasonally adjusted figures, supported by the advance of oil and manufacturing exports with 10.47% and 3.61%, respectively.
At an annual rate, exports increased 7.37%, the highest since May 2019. Regarding imports, a monthly advance of 2.86% was observed, as a reflection of the increase in oil imports (10.87%) and consumer goods (5.16 %). In annual terms, imports showed a slight growth of 0.06%, the first after 18 months of contractions.
In Mexico, the Quarterly Indicator of State Economic Activity (ITAEE) for the third quarter of 2020 was also published, a period in which the economy showed a rebound effect, growing 12% quarterly, after the fall in the second quarter.
Therefore, a quarterly advance was observed in practically all the states of the country, with the exception of Campeche (-0.5% quarterly), being the only entity that does not show a defined pattern of seasonality, so the original series is used) .
The states that showed the highest quarterly increase were: Puebla (+ 28.3%), Baja California Sur (+ 25.5%), Zacatecas (+ 23.3%), Aguascalientes (+ 22.9%) and Baja California (+22.3 percent).
Puebla’s growth was driven by the automotive industry, a strategic sector in that state. On the other hand, the growth in Baja California is a rebound effect after the deep drop observed in the second quarter (-37.9% in Baja California Sur and -18.47% in Baja California).
Despite the quarterly growth, all entities show annual contractions during the third quarter, highlighting the states of: Quintana Roo (-28.9%) and Baja California Sur (-24.8 percent).
For its part, Tabasco is the one with the lowest annual drop (-0.2%), which has benefited from public investment in infrastructure. Going forward, it is expected that the entities with the greatest participation in tertiary activities will continue to be the most lagging behind, since in the last months of the year restriction measures were tightened in most of the states, including the City and State of Mexico.
During the session, the exchange rate is expected to trade between 20.30 and 20.55 pesos per dollar. The euro starts the session with a depreciation of 0.06%, trading at 1.2104 dollars per euro, while the pound loses 0.26% and is trading at 1.3651 dollars per pound.
Money market and debt
In the United States, the yield on the 10-year Treasury bonds increases by 0.7 basis points, to 1.02%, while in Mexico the yield on the 10-year M bonds increases by 1.5 basis points, at a rate of 5.61 percent .
Derivatives market and peso
To hedge against a depreciation of the peso beyond 20.50 pesos per dollar, a purchase option (call), with an exercise date within 1 month has a premium of 2.31% 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 20.4918 at 1 month, 20.8450 at 6 months and 21.2528 pesos per dollar at one year.
Gabriela Siller; PhD
Director of Economic-Financial Analysis.