The exchange rate moves in line with most currencies in the broad basket of main crosses, while the dollar index advances 0.17%, gaining ground for the third consecutive session, reaching its highest level since July 1, 2020.

It is worth mentioning that the dollar index has gained ground in 12 of the last 13 sessions, accumulating an advance of 2.42%, driven by the expectation that the Federal Reserve will adopt a more restrictive monetary stance.

Yesterday afternoon the president of the St Louis Fed, James Bullard, pointed out that increases of 75 basis points should not be ruled out, to bring the interest rate to a level of 3.5% this year. Although this is not his base case, to date it is his most aggressive comment regarding future interest rate increases.

The market will continue to pay attention to the comments of other Federal Reserve officials between today and Thursday, since they will be the last public opinions before the monetary policy announcement scheduled for May 4, where the market anticipates an increase in the interest rate 50 basis points, which anticipates a strong dollar in the short term.

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This morning, the 10-year Treasury note rate reached a maximum of 2.9070%, a level not seen since December 13, 2018. In contrast, in Japan, the 10-year rate stands at 0.24%.

Losses were recorded in the raw materials market, mainly in energy prices. Downward pressures came from the strengthening of the US dollar, as international demand for commodities priced in dollars is reduced.

Likewise, nervousness persists regarding a possible weakening in demand, given signs of an economic slowdown in China due to the mobility restrictions implemented since March.

Regarding economic indicators, the INEGI published the Timely Indicator of Economic Activity (IOAE) corresponding to March 2022, which shows that during the third month of the year the Mexican economy grew 0.83%.

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If the IOAE estimates materialize, the Global Index of Economic Activity would be showing 5 consecutive months of growth as of March. For the first quarter, the IOAE estimates an accumulated growth of 1.46%, being the highest quarterly advance of the Timely Indicator since the first quarter of 2021.

Within the IOAE, the indicator anticipates that in March there was a growth of 1.05% in the secondary sector, while for the tertiary it anticipates an advance of 0.73%. With this, the accumulated variation in the first quarter would be 0.97% for the secondary sector and 1.66% for the tertiary sector. In annual terms, the IOAE advanced 0.38%, the lowest annual rate since October 2021. However, annual growth rates are expected to be lower as the effect of the low base of comparison fades.

During the session, the exchange rate is expected to trade between 19.78 and 20.02 pesos per dollar. The euro appreciates 0.16%, trading at 1.0799 dollars per euro. For its part, the pound sterling depreciated 0.02%, trading at 1.3016 pounds per dollar.

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Original note