THE PESO moved sideways against the dollar on Wednesday as the market was cautious ahead of the result of the US Federal Reserve meeting.

The local currency closed the session at P50.48 yesterday, three centavos stronger than the P50.51-per-dollar finish on Tuesday.

The peso opened slightly stronger at P50.50, while its intraday high stood at P50.43. Its worst showing, meanwhile, was at P50.525 against the greenback.

Trading volume dropped to $576.95 million yesterday from the $665.6 million that changed hands the previous session.

A trader said there was not much movement in yesterday’s session as the market consolidated while waiting for clues ahead of the close of the Fed’s policy meeting.

“We’re still are in a quandary as to where the next direction will be,” a trader said over the phone, noting that the buying from oil companies was countered by inflows and remittances from overseas Filipinos ahead of the holidays.

“In terms of direction, there’s also a lot of factors to consider. Globally, we’re seeing the dollar to be supported, but domestic factors are also pointing at stronger peso as the [tax reform] will probably push the local currency higher,” the trader added.

“The peso slightly appreciated today due to lack of fresh leads with the US Federal Reserve already being perceived by the market to likely raise policy rates this December,” another trader said in an e-mail on Wednesday.

The Federal Reserve is widely expected to raise interest rates on Wednesday, but, more significantly, it may give its strongest hint yet on how the Trump administration’s tax overhaul could affect the US economy.

Investors will pay close attention to how the central bank aims to balance a stimulus-fueled economic boost with the ongoing weak inflation and tepid wage growth that has curbed some policy makers’ appetite for higher rates.

The Fed has increased rates twice in 2017 and is currently expected to push through three more hikes next year.

For today, traders are expecting the peso to move sideways, as one trader gave a forecast range of P50.35 to P50.65.

“The local currency is expected to move sideways amid uncertainties on policy rate decisions of various other major central banks [today] including the BSP (Bangko Sentral ng Pilipinas) and the European Central Bank,” the second trader said.

Meanwhile, the first trader gave a slimmer range of P50.45 and P50.65. “The next level of support should be around P50.24, which is the recent [high], while the next level of resistance might be at P50.65.”

Other Asian currencies were little changed as traders were wary of taking fresh positions ahead of a Fed rate decision later in the day. With the Fed widely expected to hike rates, the focus is turning to any clues on its 2018 tightening plans.

The dollar index, which tracks the greenback against a basket of six major rival currencies, fell as Democrat Doug Jones beat Republican Roy Moore in a bitter US Senate race in Alabama. The dollar index was down 0.2% at 93.948. — K.A.N. Vidal with Reuters