Peso strengthens ahead of FOMC minutes
THE PESO traded sideways on Wednesday to close a tad higher amid thin trading ahead of the release of the minutes of the Federal Open Market Committee’s (FOMC) last meeting.
The local currency closed at P50.23 versus the greenback yesterday, gaining two centavos from its P50.25-a-dollar finish in the previous session.
The peso opened Wednesday’s session higher at P50.22 per dollar and strengthened to as much as P50.20 during the day. It’s intraday low was recorded at P50.28 against the greenback.
However, dollars traded declined to $355.3 million yesterday from the $578.5 million recorded in the previous session.
Traders said in separate phone interviews that there were no catalysts during yesterday’s session, causing minimal movement in the exchange rate.
“Markets are really quiet, we didn’t see any movement,” said a trader. “We are just entering a phase of consolidation,” he added.
“I think after the big move, it’s a two-way demand. There were sellers, there were also significant buyers. When you see consolidation, definitely you’ll see volume shrink,” the trader said. “When it’s consolidating, you can say if players were going long, some just probably staying on the sidelines, just waiting for more action, others reducing their position.”
Meanwhile, Land Bank of the Philippines Market Economist Guian Angelo S. Dumalagan said in an e-mail that the “weaker than expected” US reports on services and manufacturing contributed to the peso’s slight gains.
One trader said the peso’s appreciation was due to profit taking ahead of the release of the Jan. 31-Feb. 1 FOMC meeting minutes.
“[There is] potential to move, but not expecting any surprises. I think we would still be relatively quiet,” the trader said.
For Thursday, a trader said that consolidation would still continue, with the peso likely to move between P50.10 and P50.40 per dollar.
Most Asian currencies were steady to firmer on Wednesday, as investors awaited the minutes of the Federal Reserve’s latest meeting for hints on the timing and pace of possible US interest rate increases.