Peso accumulates five sessions appreciating against the dollar

The Mexican currency maintains its resistance against the dollar. This Thursday sealed its fifth consecutive appreciation against the US currency, with which it registered an advance of 1.86% during the last five sessions, reaching a maximum of 20.6430 and a minimum of 20.3080 units per greenback.

Meanwhile, at the end of the day it ended at 20.2945 pesos per dollar, equivalent to an appreciation of 0.28% or 5.84 cents, show data from the Bank of Mexico.

Thursday’s advance came a day after the Federal Reserve (Fed) increased interest rates by 75 basis points, for the second consecutive time, in order to control historical inflation for the United States (9.1%).

Added to the above are the data published on the Gross Domestic Product (GDP) of the United States, which ended with a contraction of 0.9% in the second quarter of this year.

For Janneth Quiroz, deputy director of Analysis at Monex Casa de Bolsa, the “winning streak” of the peso is explained, in large part, by the “weak” behavior of the dollar, which measured by the Dollar Index (DXY) has given ground against other relevant currencies such as the yen, the pound sterling and the Swiss franc.

The DXY, which measures the strength of the US currency among a sample of six currencies, has fallen 0.31% in five trading days to settle at 106.21 points, according to Investing data.

“The behavior of the exchange rate has been determined by the information published in the United States, with the widely expected data from the Federal Reserve that raised the reference rate by 75 basis points (to take it between 2.25 and 2.50%) and other economic data. ”, explained the Monex specialist.

He added that the message from Jerome Powell, president of the Federal Reserve, generated a positive reaction among market participants, since he expressed that at some point it will be appropriate to reduce the pace of rate hikes, although they will be attentive to the evolution of the United States economy.

However, Powell did not rule out “another big increase” in September, which if materialized would be the third increase of 75 basis points, which would raise the rate to a range between 3 and 3.25 percent.

Janneth Quiroz considered that “the appetite” for the dollar has also moderated, after some indicators have shown signs of a slowdown in economic activity.

According to Gabriela Siller, director of Economic and Financial Analysis at Banco Base, the dollar has weakened because speculation about monetary policy in the United States has decreased and the probability of a rise in interest rates at a faster pace.

But, in addition, the quarterly contraction of US GDP during the second quarter means weakness for aggregate demand and, therefore, the probability that inflationary pressures will diminish, which also reduces speculation about the future of interest rates. interest.“The decline found a support level around the area of ​​20.30 units per dollar, a level that also limited the falls at the beginning of July. This zone is therefore a key support and a consolidation below would consolidate the path towards the 55-day simple moving average, which stands at 20.15 pesos per dollar. The next support is located at 20.00 units”, OctaFX analysts wrote in a report.

They added that on the contrary, a recovery of the dollar above 20.55 units would improve the outlook for the US currency.

The positive outlook for the peso prevails in the short term, OctaFX analysts said.

However, Gabriella Siller pointed out that the appreciation for the Mexican currency is limited because the decrease in GDP in the United States implies a risk for economic growth in Mexico in the second half of this year.

It will be key to know this Friday the data on Mexico’s economic growth for the second quarter, which could also cause oscillations for the local currency.

Other currencies are favored

Other currencies of strong and emerging economies have also been favored by the weakening of the dollar in the last five sessions, as well as by the increase in the prices of some metals, such as copper, due to China’s plans to grant loans to the real estate sector until for up to 1 billion yuan.

At the head is the Brazilian real, reflecting an appreciation of 5.48% against the dollar; the Japanese yen is the second currency with the highest advance against its US pair, with a rebound of 2.20%, the Chilean peso with 1.9% and the pound sterling with an advance of 1.36 percent.

The dollar has also lost 1.20 percent against the Swiss franc.

The currencies that fell against the US currency are the euro, which has lost 0.47%, the Peruvian sol fell 0.51% and the Argentine peso fell 1.8% in its price against the dollar.

termometro.econmico@eleconomista.mx