The peso begins the session with an appreciation of 0.25% or 4.3 cents, trading around 17.09 pesos per dollar, with the exchange rate touching a maximum of 17.1426 and a minimum of 17.0722 pesos per dollar. The appreciation of the peso is due to a weakening of the US dollar of 0.15% according to the weighted index, while the market is awaiting the Federal Reserve’s monetary policy announcement scheduled for tomorrow at 12:00 p.m.
The market does not anticipate changes to the interest rate, but is waiting to know the tone of the statement, the message from the president of the Fed, Jerome Powell, and the projections for the interest rate, economic growth and inflation. It is worth remembering that the most recent inflation data in the United States shows a reboundas a consequence of higher gasoline prices, so additional increases in the interest rate cannot be ruled out.
In the broad basket of major crossroads, The most appreciated currencies today are: the Canadian dollar with 0.67%, the Norwegian crown with 0.65%, the Australian dollar with 0.51%, the New Zealand dollar with 0.44%, the Russian ruble with 0.39% and the South African rand with 0.38%. The most depreciated currencies today are: the South Korean won with 0.31%, the Polish zloty with 0.27%, the Malaysian ringgit with 0.14%, the Japanese yen with 0.09% and the Taiwanese dollar with 0.07%.
It is important to note that the most appreciated currencies today are from countries that produce raw materials, driven by gains in that sector, mainly among the energy sectors.
WTI oil gains 1.33%, trading at $92.70 per barrel, due to the expectation that the supply of OPEC and its allies (OPEC+) will remain limited, after the Saudi energy minister mentioned on Monday that they will continue working to keep the oil market stable. WTI reached a maximum of $92.95 per barrel during the early morning hours, a level not seen since November 7, 2022. It is not ruled out that in the coming days the price of WTI could rise to 100 dollars per barrelwhich could give a boost to the currencies of raw material producing countries.
However, higher energy prices would also generate additional inflationary pressures globally and the expectation of more restrictive monetary stances.
Losses stand out in the capital market, due to caution awaiting the Federal Reserve’s monetary policy announcement. In Asia, Japan’s Nikkei 225 lost 0.87%, Hong Kong’s Hang Seng advanced 0.37% and Shanghai’s CSI 300 lost 0.19%. In Europe, London’s FTSE 100 loses 0.03%, CAC 40 loses 0.08% and Germany’s DAX loses 0.38%. In the United States, the Dow Jones lost 0.09%, the S&P 500 0.21% and the Nasdaq 0.33%.
Regarding economic indicators, In the United States, housing starts for August were published, which stood at 1,283 million, showing a monthly drop of 11.3%, much greater than the drop expected by the market of 1.2% and reaching its lowest level since June 2020. At an annual rate, housing starts fell 14.8%, declining in 14 of the last 16 months. In contrast, construction permits grew 6.9% monthly, exceeding the market expectation that anticipated a monthly contraction of 0.3% and being the highest growth rate since February of this year. At an annual rate, construction permits register a drop of 2.7%, accumulating thirteen consecutive months of contractions.
Although the dollar continues to show losses, it showed a slight rebound after the publication of construction permits that exceeded market expectations.
In Mexico, growth according to the Timely Indicator of Economic Activity (IOAE) for July was revised upward from 0.22% to 0.32% monthly. For its part, the IOAE for August shows a monthly growth of 0.17%, indicating a slight slowdown. Assuming that the IOAE shows 0% growth in September, the third quarter GDP would show quarterly growth of 0.82% and annual growth of 3.14%. With this growth of 0.82% in the third quarter, even if the economy stagnated and did not grow at all in the last quarter of the year, throughout 2023 the GDP would have shown an annual growth of 3.22%.
On the other hand, The OECD revised its economic growth estimates for 2023 and 2024. For global economic growth, the projection was revised upward by 0.3 percentage points (pp) to 3.0%, while for 2024 the revision was downward by 0.2 pp to 2.7%. For the United States, an upward revision was made to the projection for 2023 from 0.6 pp to 2.2% and for 2024 from 0.3 pp to 1.3%. Along with higher economic growth expected for the United States, the OECD also revised upward Mexico’s growth expectation for 2023 by 0.7 pp to 3.3% and for 2024 by 0.4 pp to 2.5%.
During the session, the exchange rate is expected to trade between 17.06 and 17.19 pesos per dollar.
Money and Debt Market
In the United States, the rate on 10-year Treasury notes rises 5.6 points to 4.35%. In Mexico, the 10-year M bond rate rises 2.7 basis points, reaching 9.65%.
Derivatives Market
To hedge against a depreciation of the peso beyond 18.00 pesos per dollar, a call option, with an exercise date within 1 month, has a premium of 0.83% and represents the right, but not the obligation, to buy dollars. at the aforementioned level. On the other hand, the interbank forward for sale is located at 17.1768 at 1 month, 17.6261 at 6 months and 18.1657 pesos per dollar at one year.
