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Peso weakens on better-than-expected US data

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PHILSTAR/MIGUEL DE GUZMAN

THE PESO depreciated against the dollar on Wednesday on better-than-expected data on housing and manufacturing from the United States reported late Tuesday.

The local unit closed at P50.631 versus the greenback on Wednesday, weakening by 5.1 centavos from its P50.58-a-dollar close on Tuesday, according to data from the Bankers Association of the Philippines.

The peso started Wednesday’s trading session at P50.57 versus the dollar. Its weakest showing was at P50.65, while its strongest was at P50.56 against the greenback.

Dollars traded went up to $762.1 million from $670 million on Tuesday.

A trader said currency’s movement for the day was still “range-bound.”

“Tuesday’s trading looks like a technical move as we saw tight range. No catalyst event so far as we’re headed to the holidays and players are just playing the range,” he said in a phone call.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the local unit’s slight depreciation to US data and global developments.

“The peso closed weaker…after stronger-than-expected US economic data on housing starts and industrial production…,” he said in a text message.

Reuters reported that US homebuilding grew more than expected in November while permits secured for home construction edged up to hit a 12.5-year high on the back of the boost coming from lower mortgage rates.

Data from the US Commerce department released on Tuesday showed that housing starts rose 3.2% to a seasonally adjusted annual rate of 1.365 million units in November, with single-family construction surging to a 10-month high and activity in the volatile multi-family sector growing for the second month in a row.

Data for October was revised higher to show homebuilding rising to a pace of 1.323 million units, instead of advancing to a rate of 1.314 million units as previously reported.

Meanwhile, the US Federal Reserve said that manufacturing production rose 1.1% in November after a downwardly revised 0.7% fall in October. Industrial output also rose 1.1% in November after a downwardly revised drop of 0.9% in October.

Excluding motor vehicles and parts, overall industrial production and manufacturing output in November rose 0.5% and 0.3% respectively.

US manufacturing which is about 11% of the world’s biggest economy has been hit by the 17-month long trade war siege between Washington and Beijing.

For today, the trader sees the peso trading from P50.55-50.65, while Mr. Ricafort gave a forecast range of P50.45-50.75. — LWTN with Reuters





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