The peso begins the session with an appreciation of 0.76% or 18.2 cents, trading around 23.89 pesos per dollar, gaining ground for the second consecutive day on a par with the South African rand that is appreciated by 1.31%, the Brazilian real that gains 0.62% and the Canadian dollar advancing 0.41 percent.
In the global financial markets, there is a greater appetite for risk in the session, with gains for most of the currencies of emerging economies.
Likewise, it is observed that the main indexes in Europe show average gains of over 1% and in the United States the futures market indicates that the capital markets will start to rise.
The market optimism is again due to news of a relaxation of the containment measures for the coronavirus, mainly in the United States.
The state of California announced that retail will be able to restart activities starting Friday. With the above, California joins states like Texas in the partial reopening process, which leads the market to speculate on the possibility of an economic reactivation.
In Europe, optimism is also due to the gradual reduction of restrictions on mobility in some countries, mainly Italy and Spain, where the possible reopening of the service sector, including restaurants, is being planned for the month of June.
Finally, in Hong Kong it was announced that from Friday they will allow the reopening of business in the service sector, including gyms, cinemas and bars, although with restrictions on occupancy. In addition, Hong Kong plans a gradual return to school from the end of May.
The peso and oil
The optimism of the market is also reflected in the commodities market, where the WTI price shows a significant advance of 10.59%, trading at $ 22.55 per barrel.
The increase in the price of oil is due to speculation that oil production will fall fast enough, avoiding saturation of crude oil storage capacity, particularly in the United States. The latest statistics on oil production and inventories in that country will be published tomorrow Wednesday.
Regarding economic indicators, a few minutes ago the trade balance in the United States was published, corresponding to March, which showed a deficit of 44.4 billion dollars, above market expectations of 44.2 billion, and what was reported in February, of 39.9 billion dollars.
From this data, it stands out that the trade deficit with Mexico stood at a record high of $ 10,058.5 million.
Banxico
On the other hand, in Mexico today at 9:00 a.m. the minutes of the last monetary policy decision of Banco de México will be published, when the Governing Board decided out of calendar to cut the interest rate by 50 basis points to 6 per hundred.
In the document, the discussion on inflation prospects will be relevant, which have been adjusted downwards in the face of the coronavirus economic shock, raising the probability of further cuts in the interest rate. It should be added that Banco de México’s next monetary policy announcement is scheduled for May 14.
During the session, an exchange rate is expected, trading between 23.65 and 24.50 pesos per dollar. The euro begins the session with a depreciation of 0.54%, trading at $ 1.0848 per euro, while the pound gains 0.15% and is trading at $ 1.2462 per pound.
Money market
In the money market, the yield on 10-year Treasury bonds increases 2.5 basis points, to 0.66%, while in Mexico the yield on 10-year M bonds remains unchanged, at a rate of 6.52 percent.
Derivatives market
To hedge against a depreciation of the peso beyond 25 pesos per dollar, a call option, with an exercise date within 1 month, has a premium of 1.76% and represents the right but not the obligation to buy dollars in the level mentioned above.
On the other hand, the interbank forward for sale is at 24.0277 at 1 month, 24.5472 at 6 months and 25.0579 pesos per dollar at one year.
Gabriela Siller; PhD
Director of Economic-Financial Analysis.
Banco BASE
