Peso climbs to new one-year high

THE PESO strengthened further against the dollar to hit a fresh one-year high on market optimism ahead of the trade negotiations between the United States and China.

The local unit closed at P51.39 versus the greenback on Monday, 18 centavos stronger than its P51.57-per-dollar finish last Friday.

This was the peso’s best showing in more than a year or since it closed at P51.31 against the dollar on Feb. 8, 2018.

The peso opened Monday’s session at P51.45 per dollar. Its intraday high stood at P51.55 versus the greenback, while it closed at its worst showing for the day.

Volume thinned to $732 million from the $1.17 billion that changed hands the previous session.

“The peso appreciated on market optimism ahead of the G20 Summit wherein President (Donald J.) Trump and Xi (Jinping) are anticipated to discuss trade matters,” a trader said in an e-mail.

Leaders of the world’s two largest economies are set to meet on the sidelines of the G20 Summit in Osaka, Japan later this week.

The meeting of Mr. Trump and Mr. Xi raises hopes that Washington and Beijing will reach a truce after their relations soured again after imposing tit-for-tat tariffs against each other’s imports.

Both China and the United States should make compromises in trade talks, Chinese Vice Commerce Minister Wang Shouwen said on Monday, ahead of a much anticipated meeting between the Chinese and US presidents at this week’s G20 summit in Japan.

Both the Chinese and US teams are making preparations for the Xi-Trump meeting, Assistant Foreign Minister Zhang Jun told the same briefing on Monday.

“We are seeing somehow risk on sentiment in emerging markets since the trade tension is affecting the big countries only,” another trader said.

The trader added that the peso strengthened after the dollar traded weaker over the weekend, dragged by the weaker-than-expected US manufacturing data.

Data company IHS Markit said US manufacturing managers index declined to 50.1 in early June, falling from the 50.5 reading in May and the 50.4 expected by the market.

“With that weak data, it fuelled the case of a rate cut from the US Federal Reserve in July,” the second trader said.

For today, the first trader expects the peso to trade between P51.30 and P51.60, while the other gave a P51.30-P51.50 range. — K.A.N. Vidal with Reuters