The peso begins the session with a moderate appreciation of 0.15% or 3.0 cents, with the exchange rate trading around 20.00 pesos per dollar, after reaching a maximum yesterday of 20.1937 pesos.

In the foreign exchange market, like the rest of the financial markets, there are no significant movements, with the dollar weighted index oscillating between profit and loss with little volatility.

This is mainly due to the fact that the market is waiting for the Federal Reserve’s monetary policy decision, scheduled for today at 1:00 p.m. in Mexico (12:00 p.m. in New York).

The mexican peso

The central institution is expected to keep its interest rate unchanged in the minimum 0.00-0.25% range and to maintain its bond purchase rhythm.

However, in recent months it has been widely speculated that, with the pace of the economic recovery in the United States and with upward pressure on the prices of some raw materials, the Fed is beginning to discuss gradually reducing purchases. bond. In this context, it will be relevant to update its economic projections, especially inflation projections, as well as the dot-plot of the interest rate.

Regarding economic indicators and relevant events, in the United States the start of home construction was published, which showed a monthly increase of 3.6% during May, while the market expected an increase of 3.9%.

The monthly increase comes after construction starts fell 9.5% in April, due to the increase in prices of construction materials such as wood and some metals.

For her part, at 9:00 a.m., the Secretary of the Treasury, Janet Yellen, will have an appearance before the Senate Finance Committee, where the topic to be discussed will be the budget for fiscal year 2022.

During the session, the exchange rate is expected to trade between 19.90 and 20.20 pesos per dollar.

The euro starts the session with a depreciation of 0.01%, trading at 1.2125 dollars per euro, while the pound gains 0.26%, standing at 1.4119 dollars per pound.

Money market and debt

In the United States, the 10-year Treasury yield remains unchanged, at 1.49%, while in Mexico the 10-year M bond yield remains unchanged, at a rate of 6.715%.

Derivatives market and the peso

To hedge against a depreciation of the peso beyond 20.20 pesos per dollar, a purchase option (call), with an exercise date within 1 month has a premium of 1.52% 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 20.0431 at 1 month, 20.4056 at 6 months and 20.8906 pesos per dollar at one year.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE