The peso closed the session with a depreciation of 0.47% or 10.5 cents, trading around 22.43 pesos per dollar, given a deterioration in sentiment in global financial markets, after initial requests for unemployment support in the United States this morning were placed at 1.30 million during the previous week, decreasing only by 10 thousand requests compared to the previous week and above the 1.25 million requests expected by the market.

This implies that the recovery in the US labor market may be stagnating and will probably be slower than expected.

As of the previous week, applications for unemployment support have been above 1 million for 17 consecutive weeks.

This increases the probability that a further increase in permanent unemployment will be observed in July.

Markets have also turned their attention to the growth in the number of coronavirus cases in the United States.

In Florida a daily growth of 4.6% in the number of cases and a record of 156 deaths was reported, while in Arizona a growth of 2.5% in the number of cases was reported.

For its part, in Pennsylvania new confinement measures were implemented, severely limiting the occupancy capacity of restaurants and other meeting points.

The peso and oil

The depreciation of the peso is also due to a drop in the price of oil, with the WTI losing 1.12% to $ 40.74 per barrel, due to OPEC’s plan to increase oil production by at least 1.9 million barrels per day, at the same time. that the expectation of a weak demand for fuels is maintained.

Along with the peso, most currencies lost ground against the dollar, with the South African rand being the most depreciated with a fall of 0.90%, followed by the Russian ruble with a depreciation of 0.71 percent.

Losses were observed globally in the capital market, from Asia where the Shanghai CSI 300 index fell 4.81%, after June retail sales in China showed an annual contraction of 1.8%, contrary to a recovery of 0.5 expected by the market.

Indicators of Banxico

In Europe, the main indices lost 0.50% on average and in the United States, the S&P 500 lost 0.34% and the Dow Jones lost 0.50%. In the session, a clear increase in the demand for risk-free assets was observed, causing the 10-year Treasury bond rate to drop 1.5 basis points, standing at 0.61 percent.

In contrast, the rate on 10-year M bonds rose 8.6 basis points during the session to 5.74 ‘percent.

Foreign exchange

In the session, the peso-dollar exchange rate reached a minimum of 22.2817 and a maximum of 22.4727 pesos per dollar, the euro-peso reached a minimum of 25.4675 and a maximum of 25.5789 pesos per euro in the interbank prices for sale. For its part, the euro hit a low of 1.1371 and a high of $ 1.1442 per euro.

At the close, the interbank quotations for sale were 22.4320 pesos per dollar, 1.2550 dollars per pound and 1.1382 dollars per euro.

Gabriela Siller; PhD

Director of Economic-Financial Analysis.

Banco BASE