Peso strengthens against dollar ahead of US data

THE PESO moved sideways against the greenback on Tuesday ahead of US economic data.

The local currency closed at P51.18 against the dollar yesterday, 2.5 centavos stronger than its P51.205-per-dollar finish on Monday.

The peso weakened to P51.20 at the open, with the intraday high at P51.07 and the low at P51.21.

Trading volume was at $476.78 million, inching up from $464.7 million the previous day, as most investors were anticipating updates from the Association of Southeast Asian Nations Summit for a decision that can affect the foreign exchange market.

Traders attributed the sideways movement to buying interest intraday.

“It opened at P51.20 but in the morning, it was quickly sold off to a low of P51.07 but as we switch those support level at P51.10. We saw a lot of buying interest again. A lot of banks were buying the dollar,” a trader said.

Another trader, meanwhile, said there was also profit taking during the session.

The first trader added that market players are adopting a wait-and-see stance ahead of the release of US consumer price index (CPI) data.

“Market will be looking at the US CPI data…, so we could expect the peso to trade at P51.10 to P51.30 [today],” the trader said.

The second trader, meanwhile, gave a wider range of P51.08 to P51.35 against the dollar.

Most other Asian currencies likewise firmed slightly on Tuesday, shrugging off weak China data as the dollar traded cautiously ahead of inflation data due this week that could set the tone for impending US interest rate hikes.

The dollar index, which tracks the greenback against six major currencies, was down 0.02% despite a rise in US Treasury yields, usually a source of strength for the dollar.

“The key data that market is looking out for is the US inflation numbers that are due tomorrow. They will be important not for the December rate hike as from all accounts it is a done deal but more for the potential path of Fed rate hikes over the course of 2018,” Khoon Goh, head of Asia research at ANZ, said on Tuesday.

A Reuters poll forecast the US CPI would rise 0.1% in October after advancing 0.5% in September.

A Federal Reserve official said on Monday he expects to back an interest rate hike next month despite caution over low inflation because US monetary policy needs to be positioned to deal with future economic shocks.

The dollar was also pressured by worries over possible delays to US President Donald J. Trump’s tax plans as Congressional Republicans pushed ahead on Monday with their tax code overhaul, but risks remain with major intraparty disputes unsettled. •