exchange market
According to the economist Gabriela Siller, the peso starts the session down 0.09% or 1.7 cents, trading around 18.02 pesos per dollar, with the exchange rate reaching a minimum of 17.9689 and a maximum of 18.0226 pesos per dollar. In the foreign exchange market, the dollar strengthened by 0.16% according to the weighted index, the ground against most of the main crosses, due to the following factors:
1. Be cautious in waiting for comments from Jerome Powell H Chairman, who will deliver the semi-annual financial plan to the Senate Banking Committee at 9:00 am. The market considers Powell’s participation as a result of the event, which is one of the last comments before the monetary policy on March 22. All that remains is a conference call by Richmond Fed President Thomas Barkin tomorrow at 7:00 am and Powell’s appearance tomorrow at 9:00 am before the House Financial Services Committee.
2. Risk aversion due to tensions between the United States and China. Overnight, Foreign Minister Qin Gang said openly that the United States is trying to suppress China in everything, something that was supported by comments from President Xi Jinping, who called the US government’s containment measures warlike. China’s unfavorable economic indicators were also published, with cumulative exports for January and February falling 6.8% compared to the same period in 2022 and imports falling 10.2%.
Because of this, they lose most of their value in the dollar. Today’s currencies are the most depreciating: the Australian dollar with 0.97%, the South African with 0.73%, the Norwegian krone with 0.70%, the Swedish krona with 0.63%, the Israeli with 0.47%, the Indonesian rupiah with 0.36% and the Swiss franc with 0.33%. Only three currencies in the basket cross the main ground: the Chilean peso with 0.42%, the Czech crown with 0.17% and the Malaysian ringgit with 0.15%.
In the capital market, mixed results are observed. In Asia, Japan’s Nikkei 225 rose 0.25%, Hong Kong’s Seng lost 0.33% and the Shanghai CSI 300 lost 1.46%. In Europe, the FTSE 100 in London advanced 0.29%, the CAC 40 in France 0.01% and the DAX in Germany 0.03%. Modest disagreements precede Powell’s comments. In the futures market, the S&P 500 advanced 0.11% and the Nasdaq 0.26%. Losses are recorded in the commodity market. WTI lost 0.72% and traded at $79.88 per barrel, while gold lost 0.39% and traded at $1,830.62 per ounce. Finally, copper falls by 0.82%, aluminum by 1.18% and nickel by 0.68%.
It is important to mention that yesterday, the Office of the Representative of the United States of America announced a request for consultation with the Mexican government regarding the restriction in the type of change of cereals. According to trade representative Katherine Tai, “Mexico’s plans threaten to disrupt billions of dollars in agricultural trade.” According to that, if the differences are not resolved, they will consider all options, including formal steps to enforce the rights of the United States under the USMCA.
Regarding economic indicators, INEGI published the National Consumer Confidence Survey (ENCO) corresponding to February 2023, which showed that consumer confidence increased by 0.49 points and with this, the index reached a level of 44.80, with the highest since November 2021. Internal confidence increased. due to optimism about the country’s economic situation compared to 12 months ago and the possibilities of purchasing durable goods. On the other hand, the economic element of the country within 12 months also increased, but to a lesser extent, while the economic element of domestic members fell by 0.92 points within 12 months.
During the session, the market is expected to trade between 17.95 and 18.10 pesos per dollar.
Money Market and Debt
In the United States, the 10-year Treasury note showed a decline of 2.5 basis points, to be considered 3.93%. In Mexico, the 10-year M bond rate showed an increase of 1 basis point, sitting at 9.31%.
Derivatives Market
As a hedge against peso depreciations beyond 19.00 pesos per dollar, a call option with a given exercise within 1 month has a premium of 0.75% and represents the right, but not the obligation, to buy dollars at the stated level.
On the other hand, the interbank forward is sold at 18.1063 at 1 month, 18.6333 at 6 months and 19.2459 pesos per dollar at one year.
