Mexico City. Despite the fact that risk appetite strengthened as the session progressed on Tuesday, the Mexican peso extended its losses against the dollar, awaiting new clues in international monetary policy and in the face of weak economic growth in Mexico.
The Mexican currency registered a daily depreciation of 0.73 percent on Tuesday, equivalent to 13.51 cents, to close at 18.7555 units per spot dollar. According to data from the Bank of Mexico (BdeM), the exchange rate showed significant volatility, operating between a maximum of 18.8200 units and a minimum of 18.7330 units.
U.S. consumer confidence and job openings remained high, signaling the strength of the U.S. economy, but Mexico’s timely gross domestic product (GDP) figure pointed to weak growth in the second quarter of 2024 and a loss of momentum heading into the second half of the year.
Risk appetite strengthened as the session progressed on Tuesday, as the dollar index, which measures the performance of the US currency against a basket of six international currencies, erased its initial rise and ended with a marginal loss of 0.07 percent, at 104.240 units, while bets grew that this year the Federal Reserve (Fed) could go beyond the already discounted two cuts of 0.25 percentage points in interest rates, despite some recent upward surprises in employment data.
The Federal Reserve’s fifth two-day meeting of the year kicked off on Tuesday, with the U.S. monetary authority expected to keep its benchmark rate unchanged at 5.25-5.50 percent, but investors are looking for more clues about the next rate move. Also awaited are actions by the Bank of Japan, which will continue amid a flurry of corporate results.
The Japanese yen rose on Tuesday ahead of the Bank of Japan’s expected to consider raising rates by 0.25 percentage points when it concludes its two-day meeting on Wednesday (evening Mexico City time).
Japan’s central bank will also detail plans to reduce its massive bond purchases as it pulls back from a decade of massive monetary stimulus.
Mixed balance
Meanwhile, the collapse of Microsoft shares took its toll on the Nasdaq, which fell 1.31 percent to 17,141.98 points; the S&P 500 lost 0.50 percent to 5,436.44 points, and the Dow Jones rose 0.50 percent to 40,743.33 points.
Microsoft shares, which closed down 0.89 percent, posted better-than-expected results, but intelligent cloud numbers missed expectations and the company fell as much as 7 percent in early after-hours trading.
The big tech companies had a mixed performance, some ended in the red, such as Amazon, Netflix, Meta or Intel, and others in the green, such as Apple and Alphabet.
The Mexican Stock Exchange (BMV), for its part, closed with a loss of 0.36 percent, equivalent to 190.36 points, to close at 52,325.42 points, affected by the fall in the sectors of basic consumer goods, telecommunications services and health.
Brent crude futures fell 1.4 percent to $78.63 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 1.4 percent to $74.73. These were the lowest closes for both benchmarks since June 5 and kept both contracts technically oversold for a second day in a row.
Manufacturing activity in China, the world’s largest crude importer, likely contracted for a third straight month in July.
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– 2024-08-03 19:42:26
