Peso up as dollar softens in Asia
THE PESO rebounded against the dollar yesterday, tracking the direction of a basket of currencies due to a weaker greenback across the board.
The peso ended at P49.505 versus the greenback on Tuesday, 11.5 centavos higher compared to its finish of P49.62 on Monday’s session.
The local unit traded mostly sideways the entire day after it opened the session at P49.58 against the greenback. Its intraday low was at P49.615 per dollar, while its peak for the day was booked at P49.47.
Dollars traded on Tuesday totalled $ 669.5 million, jumping from the $405.3 million that changed hands in the previous session.
Traders attributed the movement to a weaker dollar in general.
“The dollar corrected overnight after we saw US equities fell so dollars softened against all currencies including the peso,” one trader said in a phone interview yesterday.
“We also saw offshore prices of dollar-peso trading lower, which in turn pushed onshore prices lower,” the trader added.
Asked what contributed to a weaker dollar across the board, the trader said, “Maybe offshore markets lightened their long positions and markets and banks here lightened their long positions as well event went short against the dollar.”
On a similar note, another trader said: “We saw a generally weaker dollar [ yesterday].”
For today, one trader said the pair may move within the P49.35 to P49.65 range while the other trader sees the peso trading between P49.35 to P49.55 versus the greenback.
ASIAN CURRENCIES RISE
The Chinese yuan and other emerging Asian currencies edged higher on Tuesday as the dollar pulled back, with investors awaiting a news conference by US President-elect Donald J. Trump later this week for further clues on policy and the direction of the greenback.
The South Korean won rose about 1%, while the Indonesian rupiah touched its highest level in nearly a month at one point and was last up 0.4% on the day.
The dollar retreated against a basket of six major currencies, with the dollar index slipping 0.3%.
The pullback in the dollar is probably due to position squaring, said Stephen Innes, senior trader for foreign exchange (FX) broker OANDA in Singapore.
“What I’m starting to see evolve early in 2017 are little short bursts of market momentum, followed up by quick profit-taking,” Mr. Innes said.
One focus is whether Mr. Trump will provide any further details on his fiscal policy proposals at a news conference on Wednesday, Innes added.
The dollar will probably see some range-trading against Asian currencies before Trump takes office on Jan. 20, said Christopher Wong, senior FX strategist for Maybank.
Traders will also be keeping an eye on comments from Fed Chair Janet L. Yellen, who is due to speak on Thursday, Mr. Wong added.
Ms. Yellen is due to give brief opening remarks and to take part in a webcast town-hall meeting with educators on Jan. 12.
Asian currencies have retreated broadly over the past couple of months as US bond yields jumped on expectations that Mr. Trump’s proposals for infrastructure spending and tax cuts will prop up US economic growth and inflation.
Such rises in US yields can reduce the attractiveness of investing in emerging market assets and spur capital outflows from such markets.