Peso slips as mar­ket awaits key US data

Business World - - BANKING & FINANCE - Lopez Melissa Luz T.

THE PESO moved side­ways yes­ter­day, slip­ping slightly, as the dol­lar fetched some gains as sen­ti­ment re­cov­ered fol­low­ing geopo­lit­i­cal ten­sions be­tween United States and North Korea.

The lo­cal cur­rency closed at P51.13 ver­sus the green­back, down two cen­tavos from Tues­day’s P51.11-per-dol­lar fin­ish.

The peso opened weaker at P51.14 and hit an in­tra­day low of P51.24 against the dol­lar. It touched the pre­vi­ous day’s level as its best show­ing dur­ing the ses­sion be­fore set­tling at the clos­ing rate.

An­a­lysts at­trib­uted the peso’s slight de­pre­ci­a­tion to geopo­lit­i­cal con­cerns off­shore, with the cur­rency merely mov­ing side­ways as it re­acted to dol­lar move­ments.

“Most of the move­ments were dic­tated by over­all move­ments by the dol­lar,” one trader said in a phone in­ter­view. “The dol­lar ex­tended a bit on its gains last Tues­day, but it was not mean­ing­ful. Eas­ing ten­sions prob­a­bly capped the top­side to dol­lar-peso trad­ing.”

Dol­lars traded on Wed­nes­day reached $567.45 mil­lion, slightly higher than the $548.9 mil­lion that ex­changed hands the pre­vi­ous day, al­though at a level that’s slightly be­low av­er­age, the trader said.

An­other ob­server pointed out that mar­ket play­ers may be on a wait-and-see mode ahead of key eco­nomic data in the US, which could shed some light on the next moves of the Fed­eral Re­serve.

“Geopo­lit­i­cal risks in the re­gion, Hur­ri­cane Har­vey’s im­pact in the US and US la­bor data are this week’s mar­ket fix­a­tion,” ING Bank N.V. Manila se­nior econ­o­mist Jose Mario I. Cuyegkeng said in a sep­a­rate mar­ket commentary, as he pointed out that in­vestors have shifted to risk aver­sion fol­low­ing North Korea’s missile launch to­wards Japan on Tues­day.

“Mar­ket cau­tion would likely re­main for most of this week un­til clearer ac­tions and re­sponses from the US come to fore,” the bank econ­o­mist said.

Reuters re­ported that in­vestor con­cerns over Pyongyang’s de­ci­sion to launch a ballistic missile to­wards Japan have be­gun to re­cede, which comes af­ter US President Donald J. Trump is­sued what ap­peared to be a more diplo­matic statement which helped ease ten­sions.

Mr. Trump said “all op­tions are on the ta­ble” in deal­ing with North Korea’s ac­tions, which was more mea­sured than his pre­vi­ous call of re­spond­ing with “fire and fury” amid threats to fire Guam, a US ter­ri­tory.

Due this week are data on la­bor, man­u­fac­tur­ing, con­struc­tion spend­ing, and car sales — all of which may bare hints as to whether the US econ­omy is sus­tain­ing its re­cov­ery in line with the Fed’s ex­pec­ta­tions.

For today, the trader ex­pects the peso to trade be­tween P5151.25, amid ex­pec­ta­tions that the lo­cal unit will sim­ply track the dol­lar. Mean­while, Mr. Cuyegkeng sees a P50.95-51.30 range.

ASIAN CUR­REN­CIES RISE

Most emerg­ing Asian cur­ren­cies rose on Wed­nes­day, with the Chi­nese yuan hit­ting its high­est level in over a year, as in­vestors’ con­cerns over North Korea’s lat­est missile launch eased.

North Korea’s launch on Tues­day of a ballistic missile over north­ern Japan ini­tially spooked in­vestors and trig­gered a slide in the dol­lar, but North Korean me­dia re­ports lacked the usual claims of tech­ni­cal ad­vances, sug­gest­ing the test may not have gone as planned.

China’s yuan rose to its high­est since June 23, 2016, and was headed for a fourth straight ses­sion of gains af­ter the cen­tral bank set sharply firmer guid­ance and fol­low­ing stronger in­sti­tu­tional and cor­po­rate dol­lar sales.

Prior to mar­ket open­ing on Wed­nes­day, the Peo­ple’s Bank of China raised its of­fi­cial yuan mid­point to 6.6102 per dol­lar, the strong­est since Aug. 17, 2016.

The South Korean won was quoted at 1,122 as of 0509 GMT, up 0.4% com­pared to Tues­day’s close of 1,126.4. Mean­while, Malaysia’s ring­git and the In­dian ru­pee inched down.

“First, risk sen­ti­ment is bet­ter due to low­ered ten­sions with North Korea. ‘All op­tions are on the ta­ble’ sounds less threat­en­ing than ‘fire and fury’, said Sean Yokota, head of Asia strat­egy at Skan­di­naviska En­skilda Banken.

“Sec­ond, the Chi­nese yuan’s strength is drag­ging Asian FX (for­eign ex­change) stronger. The cen­tral bank seems okay with a stronger cur­rency.”

Cur­rency traders are now look­ing to US non-farm pay­rolls data for Au­gust, due on Fri­day, fol­low­ing data that showed US con­sumer con­fi­dence surged to a five-month high in Au­gust as the la­bor mar­ket im­proved and house prices rose. —

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