Peso continues to strengthen as Trump speech sinks greenback
THE PESO extended its climb against the dollar yesterday as market players decided not to buy the greenback after the new US President failed to provide clearer policy directions and details on his planned fiscal stimulus to the US economy.
The peso ended at P49.87 versus the greenback on Monday, five centavos higher than its P49.92 finish after Friday’s session.
The local unit was traded better against the greenback the entire session after it opened at P49.85 a dollar. Its intraday trough was logged at P49.88, while its peak for the day was recorded at P49.825 versus the foreign unit.
Dollars traded on Monday totalled $ 513 million, dropping from the $ 716.7 million that changed hands in last Friday’s session.
Traders said the peso climbed against the dollar yesterday as the greenback weakened across a basket of currencies overnight after markets reacted to US President Donald J. Trump’s neutral inauguration speech, during which he failed to tackle his campaign plans for the US.
“The peso appreciated today as President Trump failed to provide concrete details about his promised fiscal initiatives,” a trader said in an e-mail on Monday.
On a similar note, another trader said: “Basically the market was on a risk-off sentiment and investors were somewhat hesitant to bet on the dollar given uncertainties on the new US administration. So markets are on wait- and- see mode on Trump’s next action.”
Mr. Trump disappointed markets again after his inauguration speech on Friday did not provide any information on his promises of cutting taxes and rampant infrastructure spending. Instead, his remarks were focused on his “America first” policy direction.
For today, one trader said that the peso may move within P49.75 to P49.95 against the greenback while the other sees the pair trading in the P49.75 to P49.95 range. Another trader said that the local unit could hit P49.70 per dollar.
Asked what other developments could affect the peso-dollar pair’s trading today, one trader said that data on US home sales to be revealed tonight may be a driver. “The peso’s trading against the dollar will be range- bound and until it breaks the P50 level, then we will know if the dollar would strengthen against the peso.”
Another trader said the exchange rate might move sideways today amid lack of major offshore catalysts.
“There might still be some upward bias for the peso due to perceptions of policy uncertainty in the US,” the trader added.
Asian currencies rose on Monday, including the Chinese yuan and the Singapore dollar, which both rose around 0.5%.
Investors are waiting for Trump and his administration to flesh out details of fiscal stimulus plans over their first 100 days in office, analysts said.