The peso starts the session with an appreciation of 0.11% or 2.2 cents, trading around 20.16 pesos per dollar, with the exchange rate touching a minimum of 20.0742 and a maximum of 20.1765 pesos per dollar.

For now, the exchange rate shows a lateral behavior during the session, although upward pressures above the level of 20.20 pesos per dollar are not ruled out.

In the foreign exchange market, a moderate strengthening of the US dollar is observed, whose weighted index advances 0.10%. Among the main crosses of the dollar, a mixed performance is observed, without a definite pattern being observed between the losing currencies.

However, the currencies that advanced the most are for the second consecutive session those of commodity producing countries or emerging economies, standing out the Russian ruble with 0.39% appreciation, the South African rand with 0.25%, the Turkish lira with 0.24%, the won South Korea with 0.23% and the Brazilian real with 0.20 percent.

It should be noted that these appreciations are moderate compared to the movements of previous days. The appreciations of these currencies are related to the performance of the commodity market, mainly energy.

The peso

Oil continues to rise with the WTI reaching a maximum price of $ 55.28 per barrel, not seen since January 24, 2020, due to the expectation of a decrease in the crude reserves of the US and China.

Likewise, OPEC + said that the oil glut is likely to be depleted by mid-2021, due to additional cuts from Saudi Arabia.

In Europe, the capital market shows moderate gains close to 0.60% on average, while in the United States it is likely that the main indices will advance for the third consecutive session, mainly those of companies in the technology sector, as the expectation of greater stimuli remains and there is the possibility of regulatory action after last week’s episode of volatility.

Treasury Secretary Janet Yellen called a meeting with financial regulators including the Securities and Exchange Commission (SEC) to discuss the recent episode of volatility in the stock market.

Yellen’s team noted the importance of maintaining integrity in the markets, protecting investors and fostering a fair and effective market.

Laboral sector

Regarding economic indicators, in the United States, the Automatic Data Processing (ADP) employment survey estimated that 174,000 job positions were created in January, exceeding the market’s expectation of 50,000, after having shown the destruction of 123,000 jobs in December.

On Friday, the non-agricultural payroll for the first month of 2021 will be published, where the creation of 50 thousand job positions is expected to be confirmed.

Perspectives

On the other hand, in Mexico, in November the Coincident Indicator of the System of Composite Indicators: Coincident and Advanced (SICCA), known as the classic approach, was located at 99 points, showing a monthly growth of 1.64%, after advancing 1.35% in October. Under this approach, the economy confirms six months in the recovery stage that began in June with the reopening.

It should be remembered that the last peak was registered in May 2018, while the valley was reached in May 2020. With this, the indicator is 12.85% below its last peak and adds 30 months below that level. Likewise, the indicator has advanced 30.09% from its lowest level (valley).

It is important to mention that, in Mexico, Cofepris authorized the use of the Russian Sputnik V vaccine, after the Gamelaya Center for Epidemiology of Russia published that its vaccine showed an effectiveness of 91.6% in the prevention of Covid-19 cases.

In the country only 0.5 people have been vaccinated for every 100 inhabitants and as the vaccination process accelerates, it is expected that the economic recovery will also accelerate.

During the session, the exchange rate is expected to trade between 20.08 and 20.28 pesos per dollar. The euro starts the session with a depreciation of 0.25%, trading at 1.2014 dollars per euro, while the pound loses 0.18% and is trading at 1.3644 dollars per pound.

Money market and debt

In the United States, the yield on the 10-year Treasury bonds increases by 2.6 basis points, to 1.12%, while in Mexico the yield on the 10-year M bonds increases by 1.5 basis points, at a rate of 5.59 percent.

The peso and 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 1.71% 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 20.1964 at 1 month, 20.5315 at 6 months and 20.9379 pesos per dollar at one year.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE