The US dollar recovered strength against its main crosses during the session, mainly due to two factors:
First factor
In the United States, coronavirus cases continue to increase, with 64,605 new infected confirmed compared to yesterday and reaching a total of 3.34 million cases across the country.
This generates the expectation that the US economy will recover slowly, generating nervousness among the participants in the foreign exchange market.
During the afternoon, the state of California ordered the closure of indoor food and entertainment services in closed establishments, while all bars will close and religious services will be suspended in some counties.
The measures in the state come after a record number of 6,485 hospitalizations were reported on Sunday. It should be noted that the state of California has the highest participation in the United States GDP with 14.7 percent.
Second factor
The Trump administration has called China’s efforts to expand the area of influence in the South China Sea illegal after years of maintaining a neutral stance on the matter.
The hardening of the United States’ position increases the risk of new tensions between the two countries that are already fighting a trade war and have made accusations of responsibility for the coronavirus pandemic. It is not ruled out that in the next few days statements by Chinese officials that generate nervousness in the financial markets will be released.
The dollar vs. the peso
The peso closed the session with a depreciation of 1.28% or 28.7 cents, trading around 22.73 pesos per dollar, being its first fall since Tuesday, July 7.
The Mexican peso was ranked as the most depreciated currency among the main crosses of the dollar, followed by the Brazilian real, which fell 1.23 percent.
Indicators of Banxico
It is worth mentioning that the Mexican peso started the session with losses, due to a greater perception of risk with respect to the country, due to the high rate of contagions and a decrease in positions in favor of the peso in the futures market.
In the session, the peso-dollar exchange rate reached a minimum of 22.3735 and a maximum of 22.7400 pesos per dollar, the euro-peso reached a minimum of 25.3526 and a maximum of 25.8032 pesos per euro in the interbank prices for sale. For its part, the euro touched a minimum of 1.1301 and a maximum of $ 1.1375 per euro.
At the closing, the interbank quotations for sale were 22.7320 pesos per dollar, 1.2553 dollars per pound and 1.1345 dollars per euro.
Gabriela Siller; PhD
Director of Economic-Financial Analysis.
Banco BASE
