Finance


Peso makes slight gains on poor US factory data




Posted on February 04, 2015


THE PESO recovered slightly against the dollar yesterday on the back of disappointing US manufacturing data.

THE PESO bounced back against the dollar after US manufacturing data disappointed.
The local unit gained two-and-a-half centavos to close at P44.135 versus the greenback on Tuesday, a tad stronger than its Monday finish of P44.160 per dollar.

It opened higher at P44.12 against the greenback and moved within the P44.06- to P44.14-per-dollar band.

Trading volume went up to $646.8 million yesterday from Monday’s $525.7 million.

“The dollar weakened mainly due to the soft manufacturing data in the US that was released last night (Monday evening),” a trader said in a phone interview yesterday.

MetisEtrade, Inc. analyst Cherica Y. Vicente agreed, saying in an e-mail that investors favored the peso over the dollar after the US manufacturing sector expanded at its slowest pace in a year last month.

The Institute for Supply Management (ISM) said its index of national factory activity fell to 53.5 from 55.1 the month before. The reading was shy of expectations of 54.5, according to a Reuters poll of economists.

A reading above 50 indicates expansion in the manufacturing sector.

Most components of the index declined, suggesting a slowing in the pace of growth in the factory sector, though the 50-plus reading marks the 27th consecutive month of growth in manufacturing.

The new orders index fell to 52.9 from 57.8. The prices paid index fell to 35 from 38.5, compared to expectations for 39.5. The employment index fell to 54.1 from 56, also short of expectations for a reading of 56.

The report comes at a time when investors are looking for clues as to when the US Federal Reserve will begin raising interest rates. The Fed last week said the US economy was expanding “at a solid pace” with strong job gains, signaling that the central bank remains on track with its plans to hike borrowing costs in 2015. It, however, reiterated that it will remain “patient” and will wait for more data that will justify a rate increase.

Both Ms. Vicente and the trader said market players will take cue from the non-farm payroll data that will be released later this week.

Ms. Vicente expects the peso-dollar pair to move within P44.01 to P44.24 today, while the trader pegged the support at P44.30 against the greenback. -- Daryll Edisonn D. Saclag with Reuters