Peso slumps on strong US jobs report

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THE PESO slumped against the dollar on Monday as the greenback strengthened across the board following upbeat US employment data as well as Wall Street’s rally.

The local unit closed Monday’s session at P52.41 versus the greenback, 18 centavos weaker than the P52.23-per-dollar finish last Friday.

The peso traded weaker the whole day, opening the session at P52.32 per dollar. It slipped to as low as P52.45, while its intraday high stood at P52.28 against the US currency.

Trading volume thinned to $842.9 million from the $881.3 million that switched hands the previous session.

A foreign exchange trader attributed the weakening of the peso to broad dollar strengthening propelled by a rally in US stocks.

“The peso moved lower due to the strong dollar across. It basically strengthened against major currencies such as Japanese yen, Chinese yuan and Australian dollar, while the euro and British pound were so far flat,” the trader said in a phone interview.

“The dollar strengthening was mainly driven by positive corporate earnings from the US, which pushed the stock market to rally over the weekend.”

Meanwhile, another trader said the peso weakened following the strong US jobs data released last Friday.

The US Bureau of Labor Statistics reported on Friday that the US economy added 304,000 new jobs in January, exceeding the expectations of a 180,000 rise in payrolls.

However, the unemployment rate rose to four percent from December’s 3.9%, partly due to the 35-day partial US government shutdown.

“The positive jobs report was contrary to market expectations after the dovish remarks from Federal Reserve Chair Jerome Powell,” the second trader added.

For tomorrow, the first trader expects the peso to trade between P52.30 and P52.50, while the other gave a P52.25-P52.45 range.

Local financial markets are closed today in celebration of the Chinese New Year.

Most other Asian currencies edged down in muted trade as the Chinese Lunar New Year holidays kept volumes low.

Many of the regional currencies were unable to shake off Friday’s losses after China’s factory activity contracted the most in almost three years, further fuelling concerns about demand from Asia’s largest economy. — Karl Angelo N. Vidal with Reuters