The Mexican peso begins the session with an appreciation of 0.38% or 8.06 cents, trading around 21.02 pesos per dollar and touching a low of 20.9588 pesos, a level not seen since March 11.
On the day, the peso is the seventh most appreciated currency, below the South African rand, the Brazilian real, the Chilean peso, the Australian dollar, the Chinese yuan and the Israeli shekel.
In the month, the peso is the second most appreciated currency, only behind the Brazilian real, while in the year it continues to fall, being the seventh most depreciated.
The peso appreciation again occurs in the face of a general weakening of the dollar, with the dollar weighted index losing 0.28% today and accumulating a 0.81% decline in the last three sessions.
In the session, a clear increase in risk appetite is observed in global financial markets, as gains are observed for most currencies and gains in European capital markets, where the main indices advance on average close to 0.70 percent.
Capital markets in the United States are also likely to post gains based on the futures market.
The peso and the world
The advance of the markets is mainly due to two news:
- In China, retail sales for August increased at an annual rate of 0.5%, the first annual increase this year. In the interior, sales of communication equipment (25.1%) and automobile sales (11.8%) stood out. Likewise, in the accumulated of the 8 months of the year, retail sales in China show a decline of 8.6% with respect to 2019, while the online sales component shows an advance of 15.8%, in the same period. For its part, China’s industrial production during August increased at an annual rate of 5.6%, above market expectations of 5.1 percent.
- BioNTech pharmaceutical company will receive 375 million euros from the German government to support the development and production of the coronavirus vaccine. Pfizer Inc., working in conjunction with BiNTech, announced that they expect to have results from their last phase of trials in October. It should be remembered that the total number of coronavirus cases continues to increase and the risk of severe outbreaks that slow or stop the economic recovery in various regions of the world is not ruled out, so the news about the progress in the development of a vaccine will continue being key to the performance of the markets.
In the session, the market could still react to the publication of economic indicators in the United States, since the industrial production for August is published at 8:15 am, where a monthly growth of 1% is anticipated. At the same time, data on manufacturing production in that country are published.
Indicators of Banxico
In the commodities market, energy commodities show gains as a result of the weak dollar. The price of WTI increases 1.34%, while Brent rises 1.03% to 37.77 and 40.05 dollars per barrel respectively.
For its part, the price of gasoline rises 0.40%. Metals also rose, mainly precious, but not due to greater demand as a refuge but because of the weakness of the dollar. Gold advanced 0.69%, while silver shows an advance of 1.80 percent.
During the session, the exchange rate is expected to trade between 20.91 and 21.20 pesos per dollar. The euro starts the session with an appreciation of 0.20%, trading at 1.1866 dollars per euro, while the pound appreciates 0.27% and is trading at 1.2846 dollars per pound.
Money market and debt
In the United States, the 10-year Treasury bond yield remains at 0.68%, showing an increase of 1 basis point compared to yesterday’s close. For its part, in Mexico the 10-year M bond rate shows a decline of 1 basis point, standing at 5.91 percent.
To hedge against a depreciation of the peso beyond 22 pesos per dollar, a purchase option (call), with an exercise date within 1 month has a premium of 0.95% 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 21.0419 at 1 month, 21.4034 at 6 months and 21.8643 pesos per dollar at one year
Gabriela Siller; PhD
Director of Economic-Financial Analysis.