THE PESO weakened after a hawkish speech by Federal Reserve Chair Jerome Powell. — PHILSTAR/MIGUEL DE GUZMAN

THE PESO weakened on Wednesday as the dollar gained ground following the upbeat testimony of US Federal Reserve Chair Jerome Powell.
The local unit ended Wednesday’s session at P53.49 versus the greenback, 10 centavos weaker than the P53.39-per-dollar finish on Tuesday.
The peso opened the session weaker at P53.44, slipping to as low as P53.525-per-dollar intraday. Its best showing stood at P53.42 against the US currency.
Dollars traded declined to $423.55 million from the $504.59 million that exchanged hands on Tuesday.
A foreign exchange trader said in a phone interview that the peso continued to consolidate on Wednesday.
“It’s still within the recent range for the dollar-peso so I think we’re still trading sideways,” the trader said. “We still saw consolidation for the local pair.”
Another trader attributed the peso’s weakness to the “hawkish” testimony of Mr. Powell before the US Senate.
“The peso depreciated following the hawkish remarks from the US Fed Chairman Jerome Powell which strengthened the gradual rate hike path of the US central bank,” the second trader said in an e-mail.
Reuters reported Mr. Powell said before the Senate Banking Committee that he sees the US on track for years of steady growth amid strong job market and steady inflation.
The central bank chief also discounted the risk that a trade war may derail the global economic recovery.
“The dollar grew stronger overnight due to some comments made by Powell. He reaffirmed the rate guidance for the US Fed,” the first trader said.
The trader added the peso weakened despite the Fitch Ratings’ affirmation of the country’s investment grade rating. The global debt watcher said Wednesday, July 18, that it has kept its “BBB” rating on the Philippines, a notch above the minimum investment grade. Fitch has also maintained its “stable” outlook.
For Thursday, the traders expect the peso to move between P53.35 and P53.55 versus the dollar.
“The peso is expected to strengthen due to likely stronger inflation reading from the euro zone and expectations of softer US housing data,” the second trader noted. — Karl Angelo N. Vidal with Reuters