Peso surges vs dollar on US-China talks

THE PESO continued to improve against the dollar on Wednesday amid increased risk appetite due to positive expectations on the US-China trade negotiations.

The local currency closed yesterday’s session at P52.08 versus the greenback, up 36 centavos from the P52.44-per-dollar finish on Tuesday.

The peso traded stronger the whole day, opening the session at P52.38 per dollar. It slid to a low of P52.40 intraday before surging to its best showing of P52.07 against the US currency.

Trading volume inched up to $948.95 million from the $924.61 million that switched hands the previous day.

Traders interviewed attributed the peso’s strength to the risk-on sentiment among market participants.

“The peso grew very much stronger against the dollar. It broke past a number of support levels such like P52.35 and P52.10,” the trader said in a phone interview.

He added that increased market appetite for riskier currencies was due to the continuation of positive reaction to the unexpected manufacturing data from China.

China’s manufacturing sector unexpectedly reversed to growth in March at 50.8 from a decline of 49.9 a month ago, according to Caixin/Markit Manufacturing Purchasing Managers’ Index released on Monday.

Apart from the better-thanexpected economic data, another trader added that sentiment on the trade talks between the United States and China continues to be optimistic.

Most Asian currencies firmed on Wednesday as reports of headway in Sino-US trade talks and easing US bond yields prompted buying of regional risk assets.

The Financial Times reported that top officials from Washington and Beijing had resolved most of the issues standing in the way of an agreement. Lower US Treasury yields, plus a slightly weaker dollar and yen, also encouraged stronger risk appetites in Asia.

Officials of both countries were scheduled on Wednesday to resume negotiations in Washington after last week’s trade talks in Beijing.

Meanwhile, the central banks of Thailand, Indonesia, Malaysia and the Philippines on Friday will sign an agreement on cooperation to promote trade and investment through local currencies, in a bid to trim exposure to volatile global markets.

The Thai baht was largely flat against the dollar.

The Chinese yuan traded about 0.21% higher. The currency, which has been especially sensitive to any news from the trade front, lost more than 5% in 2018 due to trade tensions with the US.

Indonesian markets were closed on Wednesday for a public holiday.

“We’re also anticipating a positive development in the US-China trade talks. The market is very optimistic as of now, that’s why we’re seeing a risk-on sentiment that’s beneficial for emerging markets,” the second trader said.

For today, the first trader expects the peso to move between P52 and P52.25 versus the dollar, while the other gave a wider P51.85-P52.20 range.

“The local currency might continue appreciating tomorrow on account of likely weaker US new jobs report tonight,” a third trader said, expecting a P51.95P52.25 range.