THE PESO recovered sharply against the dollar on Thursday on the back of dovish remarks from US Federal Reserve chair Jerome Powell.

The local unit closed Thursday’s session at P51.19 versus the greenback, 27 centavos stronger than its P51.46-per-dollar finish on Wednesday.

The peso opened the session stronger at P51.30 against the US currency. Its worst showing stood at P51.34, while the local unit closed yesterday’s session at its intraday high.

Dollars traded climbed to $883.31 million from the $729.69 million that changed hands the previous session.

“The peso strengthened sharply after US Federal Reserve Chairman Jerome Powell reinforced dovish policy cues in his US congressional testimony last night and similar dovish indications from the June 2019 Fed policy minutes,” a trader said in an e-mail on Thursday.

In a prepared speech to the House Financial Services Committee, Mr. Powell hinted of a cut in interest rates, saying the central bank will “act as appropriate” to sustain expansion as “crosscurrents” such as trade tensions and concern on global growth are weighing on the economy.

The US was embroiled in a trade war against China as both countries hurled tariffs against each other’s imports. However, tensions cooled late last month after Washington and Beijing agreed to resume negotiations.

Mr. Powell’s testimony strengthens the case of a rate cut from the Fed when its policy-making Federal Open Market Committee (FOMC) meets again later this month. According to the minutes of FOMC’s June 18-19 meeting, several Fed officials said a near-term rate cut was warranted to quell the effects of possible economic headwinds.

“Powell’s testimony was seen as more dovish than expected, that’s why the dollar fell against basically all currencies,” another trader said.

The trader added that the peso still has a room to strengthen, although any upward move might be limited by the expectation of a rate cut from the Bangko Sentral ng Pilipinas.

For today, the first trader expects the peso to trade between P51.05 and P51.25 versus the dollar, while the other gave a P51.10-P51.30 range. — Karl Angelo N. Vidal