THE PESO strengthened a tad to hit a seven-week high as the dollar weakened due to slower employment growth in the United States.
The local unit closed Thursday’s session at P51.74 versus the greenback, four centavos stronger than the P51.78-per-dollar finish on Wednesday. This was the peso’s best showing in seven weeks or since it closed at P51.64 per dollar last April 15.
The peso opened the session slightly stronger at P51.76 per dollar. It dipped to as low as P51.83 intraday, while its best showing stood at P51.73.
Trading volume dropped to $714.4 million from the $1.04 billion that switched hands the previous session.
A trader said the peso moved sideways yesterday even as the dollar was “generally weak” due to disappointing job growth in the US last month.
Payroll processing company ADP reported on Wednesday private firms only added 27,000 new positions in May, way below the estimate of Dow Jones at 173,000. The disappointing data may be considered as a signal that US economic growth is slowing.
“The employment numbers came in lower than expected and at its multiyear lows. That’s why we saw general dollar weakness, but dollar-peso did not really move in line with that. The peso was just range-bound,” the trader said in a phone interview.
Meanwhile, another trader said the peso appreciated following the faster-than-expected May inflation report and dovish stance of some US Federal Reserve officials.
The Philippine Statistics Authority reported on Wednesday that inflation accelerated to 3.2% in May from the three percent tallied the previous month and the 4.6% recorded in May 2018.
The quicker inflation print, which was also faster than the three percent median in a BusinessWorld poll, was driven by higher prices of food and non-alcoholic beverage as well as water, electricity, gas and other fuel costs.
“With the inflation, the concern there is it’s higher than expected. It’s a limiter for the (Bangko Sentral ng Pilipinas) in terms of them being able to cut (interest rates),” the first trader said.
The trader added that risk-off sentiment persisted amid ongoing trade tensions in the United States, with the latest development being with Mexico.
For today, the first trader expects the peso to trade between P51.65 and P51.90, while the other gave a P51.60-P51.80 range. — Karl Angelo N. Vidal