THE PESO is poised to appreciate this week on renewed hopes that US and China will be able to hammer out a “phase one” trade deal.

The local unit closed at P50.65 versus the greenback on Friday, stronger by three centavos from its P50.68 per dollar close on Thursday, according to data from the Bankers’ Association of the Philippines (BAP).

However, the peso ended weaker by 16 centavos from its trading close of P50.49 on Nov. 11.

Dollars traded on Friday slipped to $1.116 billion from $1.170 billion recorded on Thursday.

One trader attributed Friday’s sideways trading to the lack of a “big moving headline”.

“Trading was sideways manner today as not much happened. It remains to be headline tone and we still see uncertainty on the US-China,” he said in a phone call.

Meanwhile, another trader said markets followed the speech of key officials from the US Federal Reserve on Thursday night.

“The trading was guided by last night’s development when three Fed members spoke, and with [US] Fed[eral Reserve] Chair[man] [Jerome C.] Powell] reiterating the US economy is still relatively healthy implying they won’t cut rates anymore for the rest of 2019,” he said in a phone call.

China and the United States are now working on the first phase of the trade agreement. Reuters quoted Chinese commerce ministry spokesperson Gao Feng as saying that cancelling tariffs is a key condition before any agreement.

Meanwhile, Mr. Powell said there is a remote risk of the US economy facing a dramatic bust, saying remains a “star economy.”

The Federal Open Market Committee is scheduled to hold its last policy setting meeting on Dec. 18-19.

This week’s trading will continue to follow major headlines such as the US-China trade talk developments as well as fresh news from the Eurozone, according to the traders.

“Any positive development on the US-China trade talks means positive for the peso and any negative is vice versa. Market players are just waiting for any developments regarding the two parties,” the first trader said.

“There is the ECB (European Central Bank) monetary policy minutes to be published…and PMIs from Eurozone,” the second trader said.

For this week, the first trader sees the peso trading at a range of P50.50-50.80, while the second trader believes it will play around a bigger margin of P50.25 to 50.85. — LWTN