exchange market
According to the economist Gabriela Siller, the peso starts the session with a decrease of 0.19% or 3.3 cents, trading around 17.99 pesos per dollar, while the exchange rate reaches a maximum of 18.0029 and a minimum of 17.9500 pesos per dollar, in touch. a new low of 17.9488 pesos per dollar on Friday. The depreciation of the peso is due to the strengthening of the US dollar by 0.11%, according to the weighted index of the stock exchange market. The market’s caution is due to the fact that Jerome Powell, the Chairman of the Fed, will appear tomorrow Tuesday at 9:00 a.m. at the Banking Panel and on Wednesday at the same time before the Committee on Financial Services of the House of Representatives.
Also, during the week relevant economic data will be released in the United States of America, which could generate speculation about future monetary policy. January factory orders and durable goods sales were released today, January trade inventories and trusts on Tuesday, ADP February job creation on Wednesday, January trade balance and January job vacancies, unemployment insurance applications on Thursday and non-farm payrolls for February on Friday, where the market expects the creation of 220,000 job positions. There will also be several monetary announcements throughout the week: the Bank of Australia on Tuesday, the Bank of Canada on Wednesday and the Bank of Japan on Friday.
The most depreciating currencies against the dollar this morning are: Turkish lira with 0.54%, Australian dollar with 0.50%, Norwegian krone with 0.48%, New Zealand with 0.42%, Chinese yuan with 0.40%, South African. The Rand with 0.28% and the Swedish Krona with 0.24%. The currencies that are gaining the most ground are: the Israeli shekel with 1.79%, the Hungarian forint with 0.63%, the Colombian peso with 0.39% and South Korea with 0.35%.
Interests begin the session with losses due to the stability of the US dollar due to the expectation of higher interest rates in the United States. The losses were also due to China’s growth being below market expectations. The Chinese government has set an economic growth target of 5% for 2023, below expectations of between 5.5% and 6%, while avoiding talk of encouraging economic stimulus to boost growth. Since the above, WTI is losing 1.48% and trading at 78.50 dollars per barrel, while gold is losing 0.25% and trading at 1,851.79 dollars per ounce. Similarly, copper falls by 1.78%, aluminum by 1.59% and nickel by 1.35%
Regarding economic indicators, in Mexico INEGI published figures for Gross Fixed Investments corresponding to December 2022, which show that the investment indicator grew by 2.70% in the month, according to seasonally adjusted figures. This marks the third consecutive month of growth and also the highest monthly growth since July 2021. At an annual rate, the IFB shows a growth of 10.30%, the highest since September 2021. Since this year 2022 Gross Fixed Investments have grown at an increased rate of 6.03%. The increase in December occurred mainly in investment in transportation equipment, both domestic (+11.96%) and imported (+7.29%), and in non-residential construction (+2.19%).
With respect to pre-pandemic levels, all investment sectors show a complete recovery as of December, with the exception of residential construction, which still registered a 16.06% lag. However, compared to the greatest historical figures, they are still strong laggards. Total investment is located 6.20% below its maximum date of July 2018, the most important components of investment in the equipment of national transport (-23.41%), residential construction (-25.14%) and non-residential construction (-19.21%).
For its part, the monthly index of private consumption shows a monthly growth of 1.01% in December 2022, the highest monthly progress since February of the same year, allowing the annual growth in December to be 3.76%. The internal consumption indicator is divided into consumption of national goods, national services and imported goods. Consumption of national goods grew by 0.88% monthly and 0.65% annually. For its part, a boost was reported in the consumption of national services, growing 2.23% per month, the highest since December 2021, progressing at an annual rate of 6.47%. Finally, the consumption of imported goods grew by 0.56% monthly, but advanced by 5.15% at an annual rate.
In all of 2022, the private consumption indicator grew by 6.61% to 2021, showing an expansion of 2.89% compared to 2019 (pre-pandemic). In the interior, the growth mainly due to the consumption of the national service shows an expansion of 8.77% with respect to 2021 and that has hardly achieved a complete recovery with respect to 2019, advancing by 0.29%. On its part, the consumption of national goods had an average growth of 2.49% in 2022. Finally, the consumption of imported goods grew by 13.94% a year. It is worth mentioning that the private consumption indicator showed a more-than-expected growth in December, while in all years 2022 it was driven mainly by the services sector. However, there are risks in 2023, when consumption of goods could slow down due to high interest rates. Likewise, the recent appreciation of the peso, together with high inflation, had a negative effect on the remittances in Mexico for three consecutive months of acquisition (between November 2022 and January 2023), which could also end growth in the year.
In Mexico, car registration was announced for February. Automotive production in February stood at 295,787 units, showing a growth of 23.00% compared to the same month in 2022, while exports stood at 230,484 units, growing by 14.18% annually. In the first two months of the accumulated year, production shows a growth of 16.66% compared to the same period of 2022, while exports grow by 11.98%. Compared to pre-pandemic levels (two months ago in 2019), automotive production continues to show a decline of 11.24%, while exports show a decline of 8.72%.
During the session, the market is expected to trade between 17.95 and 18.08 pesos per dollar.
Money Market and Debt
In the United States, the 10-year Treasury note showed a decline of 4.7 basis points, settling at 3.90%. In Mexico, the 10-year M bond rate starts with a 3 basis point decline, sitting at 9.28%.
Derivatives Market
As a hedge against peso depreciations beyond 19.00 pesos per dollar, the call option with an exercise date within 1 month has a premium of 0.76% and represents the right, but not the obligation, to buy dollars at the aforementioned level.
On the other hand, the interbank forward was sold at 18.1067 at 1 month, 18.6271 at 6 months and 19.2429 pesos per dollar at one year.
