Peso strengthens ahead of Yellen speech, US data
THE PESO appreciated for the second straight session yesterday, supported by strong buying among market players ahead of the release of jobs data in the United States and remarks from the Federal Reserve chair.
The local unit ended at P51 per dollar, up five centavos from the P51.05 finish on Tuesday.
The peso traded generally stronger during the session although within a narrow range. It opened at P51 against the greenback, which also happened to be the intraday low.
The local currency tested the P50.90 level during trading, which was its best showing on Wednesday.
Sought for comment, traders attributed the sideways movement of the peso to the market’s wait-and-see stance ahead of the release of key economic data in the US, which could bare fresh hints on the chances of a rate hike by yearend.
In particular, one trader said investors are anticipating the release of the privately commissioned ADP national employment report due Wednesday, which comes days ahead of the official US jobs data due Friday.
“If it (ADP report) points to very weak data, that will really affect the exchange rate… But if the market is right that it will be weak but better than what is expected, I guess the trend of a firm dollar will continue. Dollar-peso will track that move,” one trader said in a phone interview.
Market players are expecting to see fewer jobs created in September due to the impact of recent typhoons that hit the country.
Another trader said the continued pickup of the peso likely came as more players took advantage of the two-day rally of the currency, following profit taking observed on Tuesday.
The trader added that investors are also awaiting the speech of Fed chair Janet L. Yellen as they search for cues as to whether a December rate hike in the US remains on the table.
For Thursday, the second trader expects the peso to stay within the P51-51.20 range, but noted that the turnout of jobs data and Ms. Yellen’s speech may affect market sentiment. The other trader, meanwhile, sees the currency trading between P50.90-P51.25. — Melissa Luz T. Lopez
