The peso starts the session with a depreciation of 0.81% or 16.3 cents, trading around 20.32 pesos per dollar, with the exchange rate touching a minimum of 20.1529 and a maximum of 20.3508 pesos.
The depreciation of the peso is mainly the result of an upward correction of the US dollar, whose weighted index increases 0.25%, showing a strengthening against most of the main crosses of the dollar.
In the financial markets there is an increase in the perception of risk, with the capital markets in Europe showing an average decline of 0.20%, due to the publication of quarterly reports worse than expected.
In the raw materials market, gains continue to be seen, with energy commodities standing out.
The WTI shows an advance of 1.53%, trading at 60.97 dollars per barrel and reaching a maximum of 61.26 dollars, a level not seen since January 8, 2020.
For its part, the price of natural gas shows a decrease in the session of 0.86%, but accumulates an increase in the week of 6.59%, while gasoline rises 2.26% in the session and accumulates a weekly increase of 7.08 percent.
The peso and oil
This is still the result of the strong frosts that have reached the southern United States and in particular the state of Texas, which has reduced oil production by about 3.5 million barrels per day, or about a third of the oil production of U.S.
It is estimated that the effects on production will continue during the week and it is not ruled out that these will extend during February, affecting in turn the supply of electricity in the southern United States and in Mexico.
In Mexico, the effects of power cuts have spread, according to the media, random cuts have been carried out in at least 29 states, beyond the 12 initially announced.
These power outages are having a direct impact on economic activity and could be significantly reflected in economic growth in the first quarter of this year.
Regarding economic indicators, in the United States, the Producer Price Index advanced at a monthly rate of 1.3% during January, exceeding market expectations of 0.4% and being the highest monthly advance since the index began (December 2009) .
In its annual variation, producer inflation showed an increase of 1.7%, being the fifth consecutive increase.
Consumption
US retail sales increased at a 5.3% monthly rate during January, well above the market expectation of 1.1%, the first increase after a three-month decline.
This as a consequence of the relaxation in the confinement measures that were observed during the month, the optimism caused by the third stimulus check and the advances in the vaccination process.
At annual rate, retail sales grew 7.4%, spinning up eight consecutive months.
At 8:15 am the industrial production for January is published, while at 1:00 pm the minutes of the last monetary policy meeting of the Federal Reserve will be released, which could also explain the caution of the markets financials this morning.
During the session, the exchange rate is expected to trade between 20.20 and 20.42 pesos per dollar. The euro starts the session with a depreciation of 0.40%, trading at 1.2057 dollars per euro, while the pound loses 0.22% and is trading at 1.3873 dollars per pound.
Money market and debt
In the United States, the 10-year Treasury bond yield increased by 1.0 basis point, to 1.32%, while in Mexico the 10-year M bond yield remained unchanged, at a rate of 5.72 percent. .
Derivatives market and the peso
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 1.74% 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 20.3438 at 1 month, 20.6696 at 6 months and 21.0836 pesos per dollar at one year.
Gabriela Siller; PhD
Director of Economic-Financial Analysis.
Banco BASE
