Peso ends flat on FOMC meeting minutes
THE PESO closed flat against the dollar on Thursday following the release of hawkish minutes of the January meeting of the US Federal Reserve.
The local currency ended yesterday’s session at P52.10 against the greenback, trading flat from its finish on Wednesday.
The peso opened the session at P52.13 versus the dollar, while its best showing stood at P52.03. Yesterday’s intraday low, on the other hand, was at P52.17 against the greenback.
Dollars traded dropped to $ 668.4 million yesterday from the $965.95 million that changed hands in the previous session.
“The peso closed sideways [ yesterday], though intraday rates were generally weaker following hawkish cues due to strong US economic growth outlook from the recently-released Fed policy meeting minutes,” a trader said in an e-mail.
During the Fed’s Jan. 30- 31 monetary policy meeting, a number of officials indicated that “they had marked up their forecasts for economic growth in the near term” as the “labor market continued to strengthen and that economic activity expanded at a solid rate.”
Earlier this month, the Bureau of Labor Statistics reported that the US economy created 200,000 new jobs in January, higher than the 180,000 market consensus.
The “substantial underlying economic momentum” supported the market sentiments for the Fed to hike its interest rates this year.
“Participants expected that with further gradual adjustments in the stance of monetary policy, economic activity would expand at a moderate pace and labor market conditions would remain strong,” minutes of the Federal Open Market Committee (FOMC) meeting read.
Meanwhile, another trader said the local currency “only traded within the range.” suspecting that the Bangko Sentral ng Pilipinas continued to intervened on the top side.
The local central bank sometimes intervenes in the foreign currency exchange to temper sharp swings.
The trader added that there was some “heavy selling” around the intraday low, giving the peso some lift to close sideways.
For today, the trader said the peso will likely move between P52 and P52.20 against the dollar, while the first trader gave a wider forecast range of P51.90 to P52.30.
“The peso is expected to move sideways due to lack of fresh leads from the US and upward pressures to the dollar for the week had already subsided,” the first trader noted.
Asian currencies languished against the dollar on Thursday after minutes of the Federal Reserve’s January meeting showed policy makers were more confident of the need to keep raising interest rates.
The dollar, which was hit recently by a barrage of bearish factors such as worries about US budget deficit and pursuance of a weaker dollar policy, rebounded this week thanks to rising US Treasury yields.
The 10-year US Treasury yield hit more than four-year highs on Thursday and was creeping towards the psychological level of 3 percent • which analysts say would drive investors away from risky assets such as emerging Asian currencies.
“We do not rule out the possibility that Fed could revise its dots projection slightly upwards for 2019 and for its terminal rate,” said Saktiandi Supaat, head of foreign exchange research at Maybank in Singapore, in a report, referring to the Fed’s expectations for its rate path.
The South Korean won, Thai baht , Indonesian rupiah and the Malaysian ringgit all shed about half a percent or more on the day, hurt by narrowing gap between the local bond yields and US Treasury yields. •