The peso begins the session with little change, showing a depreciation of 0.12% or 2.7 cents and trading around 22.35 pesos per dollar, given a weakening of most currencies against the US dollar.
It is important to mention that the strengthening of the dollar is moderate, since the weighted index shows an advance of only 0.10% compared to yesterday’s close.
The strengthening of the dollar occurred overnight, after the publication of mixed economic indicators for China.
During the second quarter, China’s GDP grew at an annual rate of 3.2%, beating expectations, after falling 6.8% during the first quarter.
When comparing the first semester with the same period of 2019, the GDP shows a fall of 1.6%. Likewise, retail sales in June showed an annual contraction of 1.8%, contrary to a recovery of 0.5% expected by the market.
On the other hand, the initial applications for unemployment support were published in the United States for the week ended July 11, which stood at 1.30 million, below the 1.31 million reported in the previous week, although above market expectations of 1.25 million.
With this information, they have accumulated 17 consecutive weeks of over a million requests. For its part, the continuous applications, which show the people who are currently receiving unemployment support stood at 17,338 million.
The peso and other indicators
For its part, June retail sales showed a monthly growth of 7.5%, above the 5.0% expected by the market, after the rebound in sales during May, when they rose 18.2 percent.
On the other hand, in the monetary policy announcement of the European Central Bank, interest rates and the bond purchase program announced after the pandemic for 1.35 trillion euros were unchanged. There is no significant reaction from the euro, which started the session unchanged from yesterday’s close, trading near $ 1.1410 per euro.
In the raw materials market, the price of oil loses ground due to the decision of the Joint Ministerial Monitoring Committee of OPEC and its allies (OPEC +), to reduce cuts in oil production from August.
The coalition will lower its restrictions to 7.7 million barrels a day, from 9.6 million cut in June and July.
Indicators of Banxico
It should be noted that members who did not fulfill their commitment to reduce production will compensate with reductions in August and September. Given this, the WTI shows a reduction of 1%, trading around $ 40.79 per barrel.
Today, the exchange rate is expected to trade between 22.25 and 22.55 pesos per dollar. The euro begins the session with a depreciation of 0.03%, trading at $ 1.1409 per euro, while the pound depreciates 0.21% and is trading at $ 1.2561 per pound.
Money and debt market
In the United States, the yield on 10-year Treasury bonds decreases 2.1 basis points, at a rate of 0.61%, while in Mexico the yield on 10-year M bonds remains unchanged at 5.65 percent.
Derivatives market
To hedge against a depreciation of the peso beyond 23 pesos per dollar, a call option, with an exercise date within 1 month, has a 1.62% premium 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 22.4167 at 1 month, 22.8186 at 6 months and 23.2774 pesos per dollar at one year.
Gabriela Siller; PhD
Director of Economic-Financial Analysis.
Banco BASE
