Peso rebounds on profit taking
THE PESO rebounded against the dollar on Thursday as investors took profits from the recent rally of the greenback.
The local currency closed at P52.15 against the greenback on Thursday, 16 centavos stronger than the P52.31-per-dollar finish on Wednesday.
The peso traded stronger the whole day, opening the session at P52.25. It dropped to as low as P52.28 while its intraday high stood at its P52.15- per- dollar close.
Dollars traded rose to $736.2 million from the $714.64 million logged the previous day.
“The peso strengthened today as market players took profits from the recent rally of the dollar in the past few days,” a currency trader said in an e-mail on Thursday.
In the past few days, the dollar grew stronger against a basket of currencies, including the peso, due to the rising US Treasury yields led by the 10-year benchmark which breached the 3% threshold for the first time in four years.
As a result, the peso slid to its one-month low of P52.32 against the dollar earlier in the week.
Meanwhile, another trader said the peso “continued to consolidate as we still don’t see any breakout yet.”
“We’re seeing flows from both sides. There’s still demand from oil companies, but we’re continuing to see inflows also,” the trader said in a phone interview.
“The offshore dollar- peso market [was] pretty much on the offer side, so there’s not much room for the dollar-peso to move higher despite the fact that we’re seeing the dollar trading stronger against the major currencies,” the second trader added.
For today, the first trader sees the peso to move between P52.05 and P52.45, while the other gave a tighter P52.10-P52.30 range.
“Investors will closely monitor the interest rate decisions by the European Central Bank ( ECB) tonight and Bank of Japan earlier tomorrow, which are expected to give boost to the dollar due to likely less hawkish policy stance from these central banks,” the first trader noted on Thursday.
Meanwhile, most other emerging Asian currencies were steady against the dollar on Thursday as the US currency paused from a rally driven by surging Treasury yields, while focus turned to the ECB’s policy review later in the day.
The dollar’s index against a basket of six major currencies was marginally lower at 91.142 at 0435 GMT, after having risen to a high of 91.261 on Wednesday.
The ECB was set to keep policy unchanged on Thursday, playing down worries over recent softness in the euro zone economy and leaving the door open to ending its lavish bond purchase scheme by the close of the year.
“The US dollar is breaking out and if the ECB is even slightly dovish tonight or perhaps not hawkish the euro could break wide open and with that, the big surge in the USD will have truly begun,” Greg McKenna, chief market strategist at contract for difference and foreign currency provider AxiTrader, said in a note.