The peso closed the week with an appreciation of 2.25% or 46.2 cents, trading around 20.11 pesos per dollar, touching a minimum of 20.0742 and a maximum of 20.5158 pesos.

The exchange rate performance during the week was lateral, with no clear trend being observed.

From a technical point of view, the exchange rate seems to be consolidating in a channel between 20.00 and 20.50 pesos per dollar, which is between the optimistic and neutral scenarios.

Due to the consolidation of the lateral channel, the peso closed the week as the second most appreciated currency in the foreign exchange market, after the Turkish lira, which advanced 3.52 percent.

After the peso, the most appreciated currencies were the South African rand with 2.18%, the Brazilian real with 1.77%, the Russian ruble with 1.47%, the Colombian peso with 0.80% and the Norwegian krone with 0.44 percent.

Something that these currencies have in common is that they are from countries that produce raw materials and in some cases produce oil, in a week in which the prices of most of the raw materials performed well.

The peso and oil

The price of WTI showed a weekly advance of 9.14%, trading at 56.97 dollars per barrel, while aluminum rose 1.92%, copper 0.82%, nickel 1.91% and steel 0.52 percent.

Prices of agricultural products such as coffee (+ 1.26%), corn (+ 0.37%), cotton (+ 2.65%) and sugar (+3.73 percent) also rose.

The rise in the prices of raw materials is based on the expectation of a global economic recovery with the availability of vaccines.

Despite the fact that vaccines are being distributed more rapidly in advanced economies, the recovery of this group of countries is likely to increase the demand for imports of raw materials, benefiting exports from emerging economies.

It is important to remember that Mexico’s main exports are manufactured goods, not raw materials.

However, there is optimism regarding the economic recovery of the United States, a country to which Mexico sends 80% of its exports.

Manufacture

Other financial markets were also optimistic with the publication of economic indicators in the United States, mainly the ISM indicators for manufacturing and services that continue to show a stable recovery, and the weekly decrease in initial requests for unemployment support.

Another factor that fuels optimism in the markets is that in the United States the Senate has already approved the proposed budget resolution, with a 51-50 vote counting the vote of Vice President Kamala Harris.

This raises the probability that the $ 1.9 trillion fiscal stimulus package will be approved with a simple majority, without the need for a bipartisan agreement.

Europe and Asia

In the capital markets, the main indices in the United States reached new all-time highs during the week and significant increases were observed globally.

Japan’s Nikkei 225 rose 4.03% on the week, while Hong Kong’s Hang Seng advanced 3.55 percent.

In Europe, London’s FTSE 100 was up 1.28% and Germany’s DAX was up 4.64 percent.

Finally, in the United States, the S&P 500 advanced 4.65%, while the Nasdaq gained 6.01% in the week, as the volatility associated with the participation of the retail market decreased.

In the week between Wednesday, January 27 and Tuesday, February 2, net speculative positions awaiting an appreciation of the peso in the Chicago Futures Market stood at 2,868 contracts, each of 500 thousand pesos.

It is the first time since December 8 that net bets have been tipped in favor of the Mexican peso.

The peso and foreign exchange

On the week, the euro hit a low of 1.1952 and a high of $ 1.2145 per euro.

Finally, the euro peso touched a minimum of 24.1453 and a maximum of 24.9989 pesos per euro.

At the close, the interbank quotes for sale were 20,1080 pesos per dollar, 1.3736 dollars per pound and 1.2047 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE