THE PESO weakened further against the dollar on Tuesday as market players await the policy decision of the European Central Bank (ECB).
The local unit closed Tuesday’s session at P51.135 versus the dollar, 5.9 centavos weaker than its P51.076 finish on Monday.
The peso opened the session at its intraday high of P51.12, while its worst showing stood at P51.20 against the US currency.
Trading volume grew slightly to $754.11 million from the $725.91 million that switched hands the previous day.
“The peso continued to weaken as markets bet on possible dovish guidance from the European Central Bank policy meeting later this week,” a trader said in an e-mail yesterday.
The ECB is seen to cut its interest rates by 10 basis points during its policy meeting on Thursday to quell the effects of global trade tensions as well as pale regional inflation, Reuters reported.
“We saw cautious trade as the market awaited the ECB rate decision on Thursday,” another trader said. “The base is no rate change, but the probability of a 10-basis-point cut is currently growing at around 34% chance.”
The trader said the peso weakened as the dollar strengthened against most currencies.
“The dollar strength across was still due to its recovery ahead of the FOMC (Federal Open Market Committee) meeting next week,” the trader said.
The US Federal Reserve is also expected to trim interest rates during its July 30-31 meeting. However, the case of a 50-basis-point cut was trimmed after the New York Fed clarified that hawkish comments from its president John Williams were not meant to imply there would be an aggressive rate cut.
For today, the first trader expects the peso to trade between P51.05 and P51.25 versus the dollar, while the other gave a P51.05-P51.20 range. — Karl Angelo N. Vidal