The peso loses against the dollar: starts at 22.02

The peso starts the session with a moderate depreciation of 0.17% or 3.8 cents, trading around 22.02 pesos per dollar, at the beginning of a day in which the publication of relevant economic information is not expected.

For this reason, the foreign exchange market and the rest of the financial markets do not show a clear direction.

In the foreign exchange market, the performance of the main dollar crosses is mixed, although the weighted index of the dollar shows a moderate decline of 0.14%, accumulating losses for four consecutive sessions.

The depreciation of the peso this morning is likely to be only a moderate correction, after the exchange rate fell below 22.00 pesos per dollar at the end of last week.

In the capital market there is some optimism in the European session, with moderate gains in most of the stock indices.

In the United States, the futures market points to an opening with gains close to 0.30% and it is highly probable that during the session the S&P 500 index will once again approach the all-time high of 3,393.52 points.

There is news that could generate nervousness in the financial markets at the beginning of the week.

On the one hand, the coronavirus continues to advance in various parts of the world and a Covid-19 mutation has been detected that is being investigated to find out if it has a higher risk of contagion.

European countries have taken greater containment measures, particularly Spain and Italy.

The peso and the pandemic

A new risk of Covid-19 is that the disruption of electoral processes is beginning to materialize.

In New Zealand, Prime Minister Jacinda Arden reported that the general elections will be postponed for a month until October 17, due to the increase in coronavirus cases in the country.

It should be remembered that, during July, the president of the United States also proposed the suspension of the elections because a vote by postal mail increased the risk of fraud.

Indicators of Banxico

The leaders of the Postal Service in the United States, warned that there could be delays in the mail before the November elections, which would prevent the delivery of ballots on time in 46 states of the country.

Because of this, Democratic Representative Nancy Pelosi called the top leaders of the Postal Service to testify in a hearing to be held on August 24.

It is expected that the House of Representatives will return from its recess for this extraordinary session and that a fund will be approved to finance the operations of the mail.

Petroleum

In the commodities market, energetics show moderate losses at the beginning of the session, with the WTI price showing a decline of 0.21%, which is consistent with nervousness regarding the global economic recovery.

For its part, the price of gold continues to advance 0.61% to 1,957.09 dollars per ounce, on a par with silver that starts with an advance of 2.70%, trading at 27.15 dollars per ounce.

During the session, the exchange rate is expected to trade between 21.98 and 22.18 pesos per dollar. The euro starts the session with an appreciation of 0.18%, trading at 1.1863 dollars per euro, while the pound appreciates at 0.03% and is trading at 1.3090 dollars per pound.

Money market and debt

In the United States, the yield on the 10-year Treasury bonds decreased by 3.1 basis points, at a rate of 0.68%, while in Mexico the yield on the 10-year M bonds decreased 5.3 basis points, to 5.72 percent.

Derivatives market

To hedge against a depreciation of the peso beyond 22.50 pesos per dollar, a purchase option (call), with an exercise date within 1 month has a premium of 1.61% 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 22.1021 at 1 month, 22.4960 at 6 months and 23.9746 pesos per dollar at one year.

 

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE