THE PESO ended flat against the dollar on Wednesday as market participants positioned ahead of the US Federal Reserve policy meeting.
The peso ended yesterday’s session at P53.07 versus the greenback, unchanged from its closing rate last Tuesday.
The peso moved sideways throughout the day, opening the session at P53 against the dollar. It went reached a high of P52.97, while its intraday trough stood at P53.105 versus the greenback.
Trading volume thinned to $658.85 million from the $790.46 million that switched hands the previous day.
Two traders interviewed yesterday said the peso’s “sideways movement” was prompted by positioning ahead of the release of the Fed’s decision on its benchmark rates.
The US central bank is expected to raise interest rates by another 25 basis points during its Dec. 18-19 meeting. However, it is seen to cut its number of hikes for next year, with the interest rate futures market pricing in only one policy tightening versus the three rate hikes the Fed had projected in September.
“I think most of the market players are expecting a rate hike for this year, but they’re also considering a dovish rate hike,” a trader said in a phone interview.
“If the Fed releases a dovish statement after hiking rates, the peso might [strengthen] with the resistance level at P53.10.”
Meanwhile, another trader said the local unit ended flat as other markets remained quiet as well.
For today, the first trader expects the peso to trade between P52.90 and P52.10 versus the dollar, while the second one gave a P52.90-P53.20 range.
“The market will probably look at the language and the dot plot for further cues [from the Fed],” the second trader noted. — K.A.N. Vidal
