Peso flat ahead of key data, Fed
AFTER HITTING fresh lows last week, the peso traded sideways on Monday, ending barely changed despite hints from the US Federal Reserve of a possible interest rate hike this month.
The local unit ended at P50.395 versus the greenback on Monday, almost flat from its the P50.40-adollar close last Friday.
The peso opened the session at P50.40 a dollar, which was already its weakest point for the day. The local unit traded within a narrow range, with its strongest intraday level logged at just P50.36-to-thedollar.
Dollars traded on Monday declined to $352.2 million from the $482.1 million logged the previous session.
“We should have reacted to [Fed Chair] Janet Yellen’s testimony last Friday. But the trade today was due to profit taking,” one trader said in a phone interview on Monday.
“The peso moved sideways today as investors remained on the sidelines ahead of this week’s US non-farm payrolls report,” another trader said. “The peso just corrected slightly, as Fed Chair Yellen’s comments last Saturday continued to bolster views of a US interest rate hike this month.”
In a speech on Friday, Ms. Yellen said raising interest rates this month would be appropriate as long as the economy continues to improve as expected.
Ms. Yellen’s remarks follow hawkish comments in recent days from a slew of Fed speakers and cement a likely rate hike at the Fed’s next meeting on March 15.
The Fed chief also said rates are likely to rise faster this year as the economy for the first time in her tenure appears clear of any imminent hurdles at home or abroad. Last December, Ms. Yellen bared plans that the Fed may raise rates by as much as three times in 2017.
Traders said the peso will likely weaken in the coming days, with the dollar expected to continue gathering strength, but caution ahead of key US labor reports may keep its gains muted.
“I still think the peso will [weaken] with the likely increase in interest rates, but I think it might be quiet,” one trader said when asked for an outlook for today’s trading.
“The peso might again move sideways, with a downward bias, due to caution ahead of the key US labor reports,” another trader said.
For today, a third trader said the peso may move within P50.20-P50.50 versus the dollar while two other traders said the local unit may move within the P50.30-P50.50 range amid persisting overseas uncertainties.
Most Asian currencies likewise edged up on Monday after sharp falls last week as the dollar dipped on profit taking.
Traders said an expected interest rate hike by the Fed next week was largely priced into markets already.
Having risen by more than 1.5% over the past month, the dollar index, which measures the greenback against a basket of six major currencies, fell for a second consecutive day as traders took profits ahead of the Fed meeting on March 14-15.