Peso edges up ahead of US data
THE PESO moved sideways versus the dollar yesterday amid quiet trading, with US markets closed for a holiday and as market players look towards key data releases scheduled later this week.
The local currency closed at P50.52 against the greenback, gaining 2.5 centavos from its P50.545 finish last Monday which was its weakest showing in over a decade.
The peso opened weaker at P50.55 during Tuesday’s trading and hit a low of P50.58-to-a-dollar within the session. It touched P50.48 as its best showing.
Dollars that exchanged hands amounted to $540.3 million, rising from $395 million the previous day to return to the average daily volume traded at the foreign exchange market.
Traders interviewed yesterday said the peso was flat versus the greenback due to a lack of leads, as financial markets in the United States were closed in observance of Independence Day, with all eyes looking towards the release of “critical” economic data.
“The exchange rate moved sideways today due to caution ahead of the FOMC ( Federal Open Market Committee) minutes and the US non- farm payrolls report on Friday. The peso’s slight appreciation might be a result of profit taking, given that US manufacturing data last night came out stronger than expected,” one trader said on Tuesday.
Another trader noted that peso-dollar trade is simply “consolidating” and moving within range, but saw an initial depreciation due to North Korea’s missile launch yesterday morning.
“North Korea’s missile launch spurred some weakness in the peso, but as soon as the initial news died down, the market traded lower,” the second trader said.
Reuters reported that Pyongyang made fired an intercontinental ballistic missile on Tuesday, triggering geopolitical tensions with neighboring countries and the US anew as it landed in Japanese waters.
Both analysts expect the peso to trade range-bound today as the market anticipates the release of the minutes of the US Federal Reserve’s June 13-14 meeting on Thursday and the latest jobs data on Friday night, as they look for hints on the timing of the central bank’s next policy moves.
The second trader said the Fed minutes “could change market sentiment,” amid mixed expectations as to whether a third rate hike will be introduced this 2017. Fed officials stood bullish on the US economy, although growth figures released last week came out softer than expected.
For today, the first trader sees the peso trading within P50.45 to P50.65 versus the dollar, while the other trader forecasts a P50.40P50.60 range.
Jose Mario I. Cuyegkeng, senior economist at ING Bank N.V. Manila, said strong demand for dollars during the imports season is likely behind the peso’s weakness.
“In the near term, it’s imports season — normally, it’s up to midOctober. When imports rise, that creates pressure or demand for the US dollar,” Mr. Cuyegkeng told reporters yesterday.
Imports grew by 11.1% from January-April to reach $28.91 billion from $ 26.02 billion in the same period last year, according to the Philippine Statistics Authority. —