THE PESO appreciated on Monday on the back of positive developments in the US-China trade talks as well as US manufacturing data.
The local unit ended trading at P50.755 against the greenback on Monday, strengthening by 4.5 centavos from the P50.80 per dollar close on Friday, according to data from the Bankers Association of the Philippines.
The peso opened at P50.85 per dollar, which was its weakest point for the day. Meanwhile, its intraday best was at P50.74 versus the greenback.
Dollars traded climbed to $1.203 billion from $1.099 billion logged on Friday.
Traders attributed the peso’s gain to news of progress in the US-China trade deal as well as US data.
“We traded in a sideways manner with peso on the gaining side due to positive developments on the US-China trade deal. And it seems like trading will continue to trace headlines for the next few days,” a trader said in a phone call.
“The peso strengthened after the US PMI’s (purchasing managers’ index) relatively good figures compared to that of the UK and the euro zone. Also, we are seeing the continued influx of remittances supporting the peso,” another trader said in a phone call.
Reuters reported that US national security adviser Robert O’Brien said on Saturday that an initial trade pact with China is still on the cards by 2019, although he warned that Washington will not disregard the continued unrest in Hong Kong.
“At the same time, we’re not going to turn a blind eye to what’s happening in Hong Kong or what’s happening in the South China Sea, or other areas of the world where we’re concerned about China’s activity,” he said.
Meanwhile, IHS Markit said the flash PMI for US manufacturing picked up to 52.2 in November from a 51.3 figure seen in October. Preliminary services PMI saw a reading of 51.6, up from the 50.6 seen in October, according to another Reuters report.
In the euro zone, business expansion plateaued this month as a downturn in the manufacturing industry appears to be increasingly affecting the bloc’s dominant services industry.
The flash November composite PMI from IHS Markit decreased to 50.3 from 50.6 in August, moving closer to the 50 mark which separates industry growth from contraction.
For today, the first trader sees a trading range of P50.60-50.90 against the dollar, while the second trader forecasts that the local unit could play around P50.70-50.85.
Meanwhile, Asian currency markets were shackled in a tight space on Monday, with investors content to hold most of their bets in light of uncertainty over progress made in US-China trade talks.
“The currency market is a bit fatigued on the trade side — tired of the alternating hot and cold headlines….the expectations are quite low right now in terms of what the deal would involve,” Sim Moh Siong, FX strategist at Bank of Singapore told Reuters. — L.W.T. Noble with Reuters