The peso starts the session with a depreciation of 0.31% or 6.1 cents, trading around 19.92 pesos per dollar, with the exchange rate touching a minimum of 19.8593 and a maximum of 19.9486 pesos.

This morning there is a moderate increase in the perception of risk in global financial markets, following the publication of economic indicators in China that show that the recovery is not homogeneous and is slower than anticipated.

On the one hand, industrial activity was close to expectations, growing at an annual rate of 9.8%, which has been driven by exports and the recovery of other countries.

However, retail sales grew 17.7% annually, below the growth expectation of 25%, sending the signal that from the second semester economic growth will be at a slower pace.

The mexican peso

The foregoing has had effects on the foreign exchange market, mainly on currencies of countries that produce raw materials or with strong trade with China, such as the New Zealand dollar, which lost 0.81% and ranks as the most depreciated currency in the wide basket of main crosses. , followed by the Norwegian krone (-0.73%), the Indonesian rupiah (-0.60%), the South Korean won (-0.53%), the Australian dollar (-0.41%) and the South African rand (-0.35 percent).

Likewise, the Mexican peso ranks as the eighth most depreciated currency.

Little relevant economic information will be published during the session, so the performance of the exchange rate will depend on the behavior of the US dollar and probably on speculation about the future of US monetary policy.

Federal Reserve Vice Chairman Richard Clarida and Atlanta Fed Chairman Raphael Bolstic will participate in a conference on financial markets at 9:05 am.

From a technical point of view, the exchange rate seems to be consolidating in a channel between 19.80 and 20.00 pesos per dollar.

Other currencies

However, it should be noted that on three occasions since the last week of April, the exchange rate has broken the resistance of 20.00 pesos per dollar, to trade in a channel between 20.00 and 20.30 pesos, so they cannot be rule out episodes of volatility during the last two weeks of May.

In the scenario that a break of the support of 19.80 pesos per dollar is observed, the exchange rate could head towards the minimum in the year of 19.5494 pesos per dollar.

During the session, the exchange rate is expected to trade between 19.80 and 19.99 pesos per dollar. The euro starts the session with a depreciation of 0.04%, trading at 1.2136 dollars per euro, while the pound loses 0.13% and is trading at 1.4078 dollars per pound.

Money market and debt

In the United States, the yield on the 10-year Treasury bonds decreased by 1.4 basis points, to 1.64%, while in Mexico the yield on the 10-year M bonds is unchanged at 6.93 percent.

Derivatives market and the peso

To hedge against a depreciation of the peso beyond 20.00 pesos per dollar, a purchase option (call), with an exercise date within 1 month has a premium of 1.90% 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 19.9890 at 1 month, 20.3424 at 6 months and 20.8255 pesos per dollar at one year.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE