Peso rises on Brexit deal, weak US data
THE PESO rose further on Friday on the back of positive Brexit developments and a series of weak US data.
The currency ended trading at P51.295 against the dollar on Friday, strengthening by about 12 centavos after closing at P51.42 Thursday.
Week-on-week, it strengthened by 28 centavos after closing at P51.58 on Oct.11.
The peso started the session at P51.36. Its low was P51.395 and the high was P51.29.
Dollar volume on Friday fell to $1.036 billion from $1.291 billion on Thursday.
Traders attributed the peso’s rally to positive sentiment surrounding Brexit and weak US data.
“The continued strength and recovery of the peso came on the back of positive risk-on sentiment as we’re seeing weak US data on manufacturing and housing,” a trader told BusinessWorld by phone, while also noting signs of optimism from the Brexit deal between the UK and Brussels.
A second trader concurred, adding: “There’s progress on the Brexit deal with the EU after three long years. It’s not the (final hurdle) yet,” pending a vote in parliament Saturday.
US manufacturing output fell more than expected in September, dragged down by a strike at General Motors, and the outlook for factories remained weak amid slowing global growth and unresolved trade tensions.
The Federal Reserve said Thursday that manufacturing production fell 0.5% last month after an upwardly revised 0.6% rise in August. Excluding motor vehicles and parts, overall industrial production and manufacturing output still fell 0.2%.
The manufacturing sector, which makes up about 11% of the US economy, has been weakened by a 15-month trade war between the United States and China, which has hurt business confidence and investment.
US homebuilding also tumbled from more than a 12-year high in September, but single-family home construction rose for a fourth straight month, suggesting the housing market remains supported by lower mortgage rates even as the economy is slowing.
Housing starts declined 9.4% to a seasonally-adjusted annual rate of 1.256 million units last month as construction in the volatile multi-family housing segment dropped, the Commerce Department said. Data for August was revised higher to show homebuilding accelerating to a pace of 1.386 million units, which was the highest level since June 2007, instead of marching to a rate of 1.364 million units as previously reported.
Meanwhile, European Union leaders gave their unanimous backing to a Brexit deal with the UK on Thursday, putting the onus on Prime Minister Boris Johnson to secure the British parliament’s approval for the deal in a vote in two days’ time. — Luz Wendy T. Noble
