Peso weakens vs dollar as market turns cautious

THE PESO weakened against the dollar on Wednesday as investors were cautious on the trade negotiations in North America.

The local currency closed Wednesday’s session at P53.46 versus the greenback, 13.5 centavos weaker than the P53.325-perdollar finish on Tuesday.

The peso traded weaker the whole day, opening the session at its intraday high of P53.35 against the US unit. Meanwhile, its worst showing stood at P53.47 versus the greenback. Dollars traded thinned to $527.3 million from the $640.85 million that switched hands the previous day.

A trader said the peso moved in sync with major currencies as market players tried to cover their short dollar positions.

“We saw the dollar move stronger across the board [on Tuesday] night,” the trader said in a phone interview. “Finally, after three to four trading days of a lower dollar, [yesterday] we saw a reversal.”

Another trader attributed the pair’s move to the participation of Canada to overhaul the North American Free Trade Agreement.

After the United States and Mexico reached a deal to revamp the free trade deal on Monday, US President Donald J. Trump warned he could proceed with the agreement with Mexico alone and impose tariffs on Canada if it does not come on board with the revised trade terms, Reuters reported.

“The trade deal between US and Mexico fuelled optimism in the market for a few days. But I guess they turned cautious about what’s going to happen in the negotiations with Canada,” the first trader said.

“Given the optimism, probably it ran its course and some investors tried to take profit on that move. We’re just seeing a bit of profit taking,” the trader added.

For Thursday, the second trader said the local unit will likely weaken further versus the dollar ahead of likely firm US personal consumption expenditures data, the preferred inflation gauge of the Federal Reserve.

The trader expects the peso to move between P53.35 and P53.55 on Thursday, while the other gave a P53.30-P53.55 range.