The peso starts the session with an appreciation of 0.16% or 3.2 cents, trading around 20.24 pesos per dollar, in the face of a weakening of the dollar against its main crosses that loses 0.13% according to the weighted index.

This is due to a moderate increase in risk appetite after it was announced that the experimental vaccine against Covid-19 developed by Pfizer and BioNTech showed a 95% effectiveness in preventing cases, according to final data from the trial clinical.

Pfizer reported this morning that it will seek authorization for its vaccine during the week, hoping that health regulators will approve its use and it can begin to be distributed by the end of the year.

Signs of accelerated progress in vaccine development and approval allow most currencies to gain ground against the dollar.

The Mexican peso is the eighteenth most appreciated currency in the foreign exchange market.

The stability of the exchange rate is a sign that there are still risks in the short term.

On the other hand, in the capital market, the main indices in Europe also show moderate gains, close to 0.35% on average.

In the United States, the futures market points to a profitable open. The Dow Jones shows an advance of 0.39% and the S&P 500 an advance of 0.22%, while the Nasdaq an advance of only 0.13%.

In previous sessions, positive news about the development of the vaccine tends to have a less positive impact on broadcasters in the technology sector, since several have been favored by the pandemic.

The peso and raw materials

Finally, in the commodities market, the WTI starts the session with an increase of 2.22%, trading at 42.35, while the price of Brent increases by 2.26% and is trading around 44.74 dollars per barrel.

The optimism of the markets continues to be overshadowed by negative news about the advance of the coronavirus.

California authorities announced new restrictions to try to stop the increase in cases.

All non-essential businesses must limit their capacity to 25%, while restaurants that have outdoor terraces may operate at a capacity of 50%, albeit in limited hours, closing at 10:00 p.m.

In Tokyo, a new record was registered in daily cases of coronavirus, reporting 493 infections in the last 24 hours.

Japanese officials raised the Covid-19 alert to its highest level, awaiting a meeting to be held on Thursday, where the new restriction measures will be discussed.

Of the economic indicators published in the session, the data on the residential market in the United States stand out.

Home starts for October advanced at a monthly rate of 4.9% and an annual rate of 14.2 percent.

For their part, construction permits remained unchanged compared to the previous month and increased 2.8% compared to October 2019.

Both indicators continue to show the strength of the residential sector in the face of low interest rates.

Indicators of Banxico

During the session, the exchange rate is expected to trade between 20.19 and 20.46 pesos per dollar.

The euro starts the session with a depreciation of 0.03%, trading at 1.1859 dollars per euro, while the pound shows an appreciation of 0.16% and is trading at 1.3267 dollars per pound.

Money market and debt

In the United States, the yield on 10-year Treasury bonds decreased by 0.8 basis points, at a rate of 0.85%, while in Mexico the yield on M-10 bonds decreased by 0.8 basis points, at 6.09 percent.

Derivatives market

To hedge against a depreciation of the peso beyond 20.50 pesos per dollar, a purchase option (call), with an exercise date within 1 month has a premium of 1.96% 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 20.3136 at 1 month, 20.6660 at 6 months and 21.1449 pesos per dollar at one year.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE