Peso closes stronger ahead of Yellen speech
THE PESO finished higher against the dollar on Tuesday on the back of profit taking amid market caution ahead of US Federal Reserve Janet L. Yellen’s speech as they continue to search for major leads.
The local currency closed at P49.88 versus the greenback on Tuesday, four centavos stronger from Monday’s P49.92-per-dollar finish.
Tuesday’s session saw the peso courting the P50per territory, opening at its worst showing for the day at P49.95 against the greenback. Its intraday high was at P49.85-to-the-dollar.
Dollars traded on Tuesday climbed to $467 million from the $347.5 million that changed hands during the previous session.
Traders attributed the dollar’s weakness against the peso to investors waiting for Ms. Yellen’s semiannual monetary testimony before the Senate Banking Committee, while other market players tweak their positions.
“Overnight, the dollar strengthened so it improved the risk sentiment of people over the dollar and US in general, so we saw record highs on equities that resulted to the dollar-peso gapping up at P49.95 at the open,” a trader said in a phone interview yesterday.
“But as usual we saw profit taking and some also changing their long positions. And at the same time our immediate resistance for now has been at the P49.95 levels, so there markets are respecting that level,” the trader added.
On a similar note, another trader said by midday there was profit-taking that caused the dollar and Japanese yen to trade lower against the peso, noting that the local currency has also been going higher these past few days.
Meanwhile, another trader said, “The peso appreciated today primarily because of profit-taking ahead of the congressional testimony of Fed Chair Yellen tonight.”
Ms. Yellen’s semi-annual testimony on Tuesday and Wednesday may provide clues on the likelihood of two or more U.S. interest rate hikes this year. She is also due to give her testimony before the House Financial Services Committee on Wednesday.
For Wednesday, two traders said the P49.80-P50-toa-dollar range will hold as markets are currently on the lookout for new catalysts and directions amid lack of leads, while the other trader said the peso’s range may take its cue depending on the tone of Ms. Yellen’s speech.
“If her tone is dovish, the peso could go up to P49.80- P49.95- a- dollar but if her hawkish comments return, we might see the peso at P49.90 to P50 figure,” the trader said. —