The peso closed the session with an appreciation of 0.83% or 19.8 cents, trading around 23.76 pesos per dollar, gaining along with most currencies in the basket of major crosses in the face of an increase in risk appetite in global financial markets.

The peso and oil

This mainly happened to two factors:

First factor

During the overnight there was speculation about an accelerated economic recovery, after an increase in demand for crude oil was reported in China to levels seen before the coronavirus pandemic.

This generated upward pressure on the price of oil, leading the WTI to trade at a maximum of $ 33.32 per barrel, closing at $ 32.37.

The greater demand for hydrocarbons was supported by a greater demand for automobile transport, a trend that could also be observed in Europe and other regions affected by the pandemic.

During the first hours of the day, the most appreciated currencies were those of countries that produce raw materials and oil.

Second factor

In the morning, news broke that a US biotech company, Moderna Inc., has made progress in developing a coronavirus vaccine.

The vaccine is currently in the initial testing stage and is expected to be tested with a larger sample in July.

Although the vaccine will not be available immediately, for the market the news is evidence that in the coming months or early 2021 there will be a vaccine that will allow the full economic reopening, speeding up the recovery process.

Markets

Due to increased risk appetite, capital markets posted significant gains, with London’s FTSE 100 closing 4.29% up and Germany’s DAX showing 5.67% up, the highest since April 6.

For its part, in the United States the S&P 500 closed with an advance of 3.15%, accumulating an increase of 4.75% during the last three sessions.

In the debt market, the rate of return on 10-year M bonds fell 2.6 basis points, reaching 6.12%, with a flattening of the yield rate curve, as longer-term rates saw decreases.

The flattening of the curve indicates that inflation expectations remain low, at the same time that in the coming months no accelerated decreases in the interest rate of Banco de México are expected to the historical minimum of 3 percent.

In the exchange market, the Japanese yen, which depreciated 0.26% and the Swiss franc, which depreciated 0.10%, stand out among the few currencies that lost ground, as demand for safe-haven currencies decreased.

Foreign exchange

In the session, the exchange rate touched a minimum of 23.4590 pesos and a maximum of 24.0467 pesos. The euro-peso reached a minimum of 25.4626 and a maximum of 26.0171 pesos per euro in the interbank prices for sale. For its part, the euro touched a minimum of 1.0800 and a maximum of 1.0927 dollars per euro.

At the close, the interbank quotations for sale were 23.7572 pesos per dollar, 1.2197 dollars per pound and 1.0918 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE