Peso inches up as market awaits Powell’s US Congress testimony

THE PESO gained a tad against the dollar on Tuesday as it moved sideways ahead of the testimony of Federal Reserve chair Jerome Powell before the US Congress.

The local unit closed yesterday’s session at P51.31 versus the greenback, up by a centavo from its P51.32-per-dollar finish on Monday.

The peso opened the session weaker at P51.36 against the US currency. It slipped to as low as P51.40 intraday, while its best showing stood at P51.26 versus the greenback.

Trading volume climbed to $761.92 million from the $651.48 million that changed hands the previous session.

Two traders said that the peso mostly moved sideways against the dollar.

“The dollar-peso traded within a range, moving in line with other currencies. It’s mostly quiet on the currency front, since there’s no data to move the market,” a foreign exchange trader said in a phone interview.

Another trader said the peso closed sideways as market participants remained cautious ahead of possible cues on the direction of monetary policy from Mr. Powell’s testimony.

Mr. Powell’s testimony comes after the stronger-than-expected US jobs data that came out last Friday. The US economy added 224,000 jobs in June, higher than market expectations of 160,000 and the downward-revised 72,000 jobs added the previous month.

“So far, the reason for the dollar’s strength is the reversal of aggressive views on Fed’s monetary policy easing. The view before was a 50-basis-point cut during this month’s meeting and probably three cuts for the rest of the year. Right now, the market is leaning to two cuts for the year and a 25-basis-point cut each,” the first trader said.

The trader added that the market is also awaiting the release of Federal Open Market Committee minutes of its June meeting where it kept interest rates steady, although opening its door for a potential cut in benchmark rates in the future.

For today, the first trader expects the peso to trade between P51.25 and P51.45, while the other gave a P51.20-P51.40 range.

Most Asian currencies were also subdued against the dollar on Tuesday as investors focused on Mr. Powell’s testimony before Congress later this week for clues on monetary policy.

Regional currencies weakened in the previous session after surging US jobs growth in June dampened expectations the Fed will deliver a large interest rate cut later in July.

Malaysia’s ringgit was 0.1% lower ahead of a central bank rate decision later on Tuesday.

Indonesia’s rupiah declined 0.1%. It has gained nearly 3% since late May when it touched its weakest level in 2019, prompting the central bank to affirm its support for the unit.

South Korea’s won gained 0.2% after the sharpest losses among its regional peers in the previous session and against the backdrop of a trade dispute with Japan. — K.A.N. Vidal with Reuters