THE PESO strengthened against the dollar on Tuesday on the back of profit taking as worries over a possible recession in the United States lingered.
The local unit closed the session yesterday at P52.445 versus the greenback, 7.5 centavos stronger than the P52.52 finish on Monday.
The peso traded stronger the whole day, opening the session at P52.45 per dollar. It rose as high as P52.37, while its intraday low stood at P52.49 versus the US currency.
Trading volume thinned further to $770.05 million from the $886.2 million that switched hands on Monday.
“The peso strengthened due to profit taking following the stronger dollar demand yesterday on wide market risk-off sentiment,” a trader said in an e-mail on Tuesday.
The wide risk-off sentiment was attributed to fears of a possible recession in the US after its yield curve inverted last week.
On Friday, yields on the 10-year Treasury note slipped below the rate of the three-month security, causing the yield curve to invert for the first time since 2007.
“They have a yield inversion in three months versus 10 years. That’s an indicative of possible recession in the future. That’s why there’s a risk-off sentiment,” another trader said in a phone interview.
The latest inversion was mainly due to the dovish pronouncements coming from the US Federal Reserve, saying that they would keep interest rates steady this year, as well as a slew of disappointing economic data in Europe and concerns over the Brexit deal.
The second trader added that the peso traded “directionless” yesterday as market players are looking for more catalysts.
For today, the first trader expects the peso to move between P52.35 and P52.55, while the other gave a P52.32-P52.60 range. — Karl Angelo N. Vidal