Peso strength­ens against dol­lar ahead of US data

Business World - - BANKING & FINANCE -

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. •

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