THE PESO dropped against the dollar on Monday, dragged by better-than-expected jobs data in the United States.
The local unit closed Monday’s session at P51.32 versus the dollar, 12.5 centavos weaker than its P51.195 on Friday.
The peso opened the session at P51.35 per greenback, slipping to as low as P51.38 intraday. Meanwhile, its best showing stood at P51.29 against the US currency.
Trading volume thinned to $651.48 million from the $770.24 million that changed hands the previous session.
Traders interviewed yesterday attributed the decline of the peso to the upbeat non-farm payrolls (NFP) data in the US released last Friday.
The US economy added 224,000 jobs last month, the US Labor Department said last week. The latest figure was higher than market expectations of 160,000 and the downward-revised 72,000 jobs added the previous month.
“The peso depreciated sharply today on diminished market expectations of a 50-basis-point (bp) policy rate reduction from the US Federal Reserve following the stronger-than-expected US nonfarm payrolls report last Friday,” a trader said in an e-mail on Monday.
Another trader concurred, saying the strong jobs data dampened market sentiment, with investors now expecting a 25bp cut from the Fed during its next meeting.
“So far, we think the market is still not going to push the dollar-peso significantly in any direction. We’re going to trade slightly weaker in a new range, but they might not break higher or lower,” the second trader said.
The trader added that market players are still awaiting big catalysts such as the policy decision of the Bangko Sentral ng Pilipinas (BSP) in August.
“Although we have remittance report this week, the key data such as the BSP Monetary Board (meeting) will take place in August. I think the market will await that.”
The central bank kept its rates unchanged during the June 20 meeting on expectations of steady inflation and economic growth, and as it monitors the impact of recent monetary adjustments.
The BSP said this “prudent pause” will allow them to “observe and assess” the impact of its previous adjustments such as the phased cut in banks’ reserve requirements.
For today, both traders expect the peso to trade between P51.20 and P51.40.
“The local currency might weaken further from dollar bargain-hunting by local participants due to reduced global dovish sentiment,” the first trader noted. — Karl Angelo N. Vidal