Peso hits 6-month high on weak US data
THE PESO continued to gain strength versus the dollar yesterday to log its best showing in over six months, on the back of weaker-than-expected jobs data in the United States and boosted by bullish comments from Moody’s Investors Service on the passage of the tax reform bill.
The local unit ended Monday’s session at P49.40 against the greenback, 15 centavos stronger than its P49.55-to-a-dollar finish last Friday.
This is the fourth straight day that the peso strengthened versus the dollar since May 31, where it improved to P49.765 from P49.84 the previous day. It is also the peso’s best showing since a P49.35-per-dollar close last Nov. 16, 2016.
The peso opened at P49.43, already appreciating from the previous week’s close. It continued to pick up strength during the day to touch P49.365 as its best showing, even as it hit a low of P49.435.
Traders interviewed yesterday said the peso’s pickup was a response to a weaker dollar, which continued to lose steam over the weekend following a disappointing report on non-farm payrolls.
“We opened lower this morning in line with the dollar’s weakness overnight. The dollar has been weak for the past few weeks anyway. At least for last night’s move, it was still the NFP (nonfarm payrolls),” one trader said by phone.
The US Labor department said there were 138,000 new jobs created in May, which is below market expectations. Despite this, analysts are still pricing in a strong chance that the Federal Reserve will introduce a fresh interest rate hike during their June 13-14 meeting.
The peso also tracked the movements of other Asian currencies, which generally gained strength versus the greenback. The Thai baht saw the biggest gains yesterday as it appreciated by 69 percentage points (pp), followed by the Malaysian ringgit at 32 pp, and the peso and the Korean won by 30 pp each, Reuters reported.
Another trader attributed the peso’s strength to comments released by Moody’s yesterday morning, which cited that the passage of the first tranche of the government’s tax reform package last week at the House of Representatives as “credit positive.”
The trader also pointed out the rally at the local stock market, which saw the bellwether Philippine Stock Exchange index (PSEi) finish at 8,001.38, its highest close since the year opened.
“Surprisingly there was no or little reaction to the Resorts World attack after authorities identified that it’s not an act of terrorism. Market instead focused on comments on the tax reform and the PSEi reaching a new high for the year,” the second trader said, referring to the shooting and fire incident on June 2 in the casino- hotel- mall complex that claimed the lives of 38 people, including a lone gunman later identified as a man in deep debt.
The first trader added that dollars traded on Monday were slightly above average at $609.9 million, although lower than the $ 908 million logged during the previous session.
For today, the trader sees the peso to remain within its current P49.40-49.80 range or even grow stronger, with little gamechanging events expected within the week.
The second trader expects the peso to move within P49.30P49.50, although flagged the conduct of general elections in the United Kingdom on Thursday as a possible factor to influence trading later this week.