THE PESO climbed versus the dollar ahead of the release of US trade data. — BW FILE PHOTO

THE PESO strengthened anew on Wednesday as the dollar slipped due to the stronger euro and ahead of the release of US trade balance data.
The local currency ended Wednesday’s session at P52.385 against the dollar, 1.5 centavos stronger than the P52.40-per-dollar finish on Tuesday.
The peso opened the session stronger at P52.35 against the dollar. It traded to a P52.32 high, while its best showing was at P52.41 against the US currency.
Dollars traded rose to $859.1 million from the $646.7 million tallied the previous day.
“We moved [higher] mainly because the dollar was weaker overnight. But mostly, the dollar-peso traded within the range,” the trader said in a phone interview. “Overnight, we saw a stronger euro. There was a report that they are looking more into reducing their stimulus. That resulted to a stronger euro and a weaker dollar.”
The trader noted that there was a heavy buying at around the P52.30 level, saying “there might be upcoming demands this week so the market is just preparing.”
Meanwhile, another trader said the peso strengthened ahead of the “likely downbeat US trade balance data in view of the recent US trade stance with its main trading counterparts.”
Earlier this month, Reuters reported that the United States will proceed with its planned tariff imposition on steel and aluminum by removing the two-month exemption of Canada, Mexico and the European Union, setting the stage for a possible trade war.
For Thursday, June 7, the first trader sees the peso to move between P52.25 and P52.45, while the other gave a P52.30-P52.50 range.
“The local currency might further appreciate easing European geopolitical concerns which can divert investors away from the dollar,” the second trader noted.
Most Asian emerging market currencies also strengthened against the dollar, which had weakened in the face of a firm euro on Wednesday, with markets awaiting direction from next week’s meetings of the US Federal Reserve and the European Central Bank.
“In the absence of Fed speak and tier one economic data, the US dollar is struggling to find a grip…what really matters for the dollar is how the market is perceiving next week’s forward guidance from the Fed,” Stephen Innes, head of Asia-Pacific trading for Oanda, said in a note. “The current currency market narrative is all about corrections and rebalancing ahead of the next week’s Fed decision which points to a USD correction with the EUR driving the bus.”
Market participants said the euro was boosted when Bloomberg, citing sources, reported that the European Central Bank could conclude its policy meeting next week by announcing when its quantitative easing program will end.
Weakness in the dollar, evidenced by a drop of 0.09% in the dollar index, lent strength to Asian currencies on Wednesday.
The export-oriented Taiwan dollar firmed 0.22%, in line with the move seen in Thailand’s baht.
The baht has gained about 2.2% this year, following a rise of more than 9.5% in 2017.
The Singapore dollar rose 0.18% on Wednesday, a little less than Indonesia’s rupiah, which trimmed its year-to-date losses to a little more than 2%.
The Chinese yuan firmed 0.1%, gaining for a third straight session. The People’s Bank of China set the yuan mid-point at 6.4040 to the US dollar, strengthening it for a second consecutive session.
Malaysia’s ringgit weakened 0.08% after Prime Minister Mahathir Mohamad said he had accepted the resignation of central bank governor Muhammad Ibrahim.
Mahathir said he has not decided on who the next governor of Bank Negara Malaysia will be. — K.A.N. Vidal with Reuters

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