Peso rebounds vs dollar ahead of US Fed minutes

THE PESO recovered on Wednesday as markets went profit taking before the policy minutes from the US Federal Reserve.

The local unit finished trading at P50.87 versus the greenback on Wednesday, appreciating by three centavos from the P50.90-a-dollar close on Tuesday, according to data from the Bankers Association of the Philippines.

The peso opened the session at P50.97 per dollar. Its weakest point for the day was at P51.025, while its strongest was at P50.88 versus the greenback.

Dollars traded dipped to $947.5 million from $959.75 million seen on Tuesday.

One trader said the peso’s sideways movement for the day was due to a “silent” trading in the absence of major events.

“It’s still about the murky situation of the US and China [trade deal]. Tahimik ang market (The market was quiet) as they are still awaiting the minutes from both the [US] FOMC (Federal Open Market Committee) and the ECB (European Central Bank),” the trader said in a phone call.

Another trader attributed the trading movements to profit-taking from market participants.

“The peso closed slightly stronger as market participants opted to take profits ahead of the release of the October Federal Reserve policy minutes tomorrow…which might solidify views that the Fed will likely pause easing US policy rates in the near-term,” the second trader said in an email on Wednesday.

US President Donald J. Trump said in a cabinet meeting on Tuesday that China would have to make a deal “I like” or the US would have to raise tariffs on Chinese imports anew should there be no clarity with Beijing to put an end to their trade war, Reuters reported.

“If we don’t make a deal with China, I’ll just raise the tariffs even higher,” Mr. Trump said in a room filled with senior US officials.

For today, both traders sees that the peso will clock in at a range of P50.80-51.

Meanwhile, most Asian currencies slipped on Wednesday as investors digested a measure by the US Senate to protect human rights in Hong Kong and China’s condemnation against the move, while Washington warned of fresh tariffs if a deal is not reached with Beijing, according to a Reuters report

However, most currencies did not mark large moves as usually seen during trade ructions, indicating that many in the market still believed an interim deal was likely.

Caution ahead of the release of minutes from the US Federal Reserve’s last policy meeting also kept trading ranges tight.

“While it has potentially complicated the US-China phase-1 deal negotiations, at this stage, it doesn’t look like it’s in danger of derailing it,” said Khoon Goh, head of Asia research at ANZ Banking Group (Singapore), referring to the US Senate’s measure.

“Markets have taken the HK bill passage in their stride… (they’ve) pretty much thoroughly priced in a successful deal, so now they really need to see evidence that this is going to go ahead.” — LWTN with Reuters