Peso strengthens ahead of Powell hearing

THE PESO surged against the dollar on Monday as the greenback performed weak in Asian trading.

The local unit closed at P50.51 against the greenback yesterday, gaining 21 centavos from Friday’s P50.72-per-dollar finish.

Yesterday’s close was also the highest in over three months or since Aug. 8’s P50.44-a-dollar finish.

The peso opened Monday’s session slightly stronger at P50.71 against the greenback. It moved to as low as P50.74 during the session, while its intraday high was its closing rate.

Dollars traded, however, slid to $655.06 million from last Friday’s $751.65 million.

Traders attributed the peso’s strength to the generally weak performance of the dollar in Asian markets.

“The peso opened flat this morning but it gradually [climbed] in the afternoon trading partly due to the weaker dollar elsewhere,” a trader said over the phone on Monday.

Guian Angelo S. Dumalagan, market economist of Land Bank of the Philippines (Landbank), attributed the dollar’s slump to weak US economic data released on Friday.

“The peso appreciated today amid last Friday’s weaker-than-expected US data on manufacturing and services,” Mr. Dumalagan said on Monday, noting that the persistent concerns over the low US inflation also affected the greenback.

Another trader said the market is on a wait-and-see mode as Jerome H. Powell, US President Donald J. Trump’s nominee to head the Federal Reserve, appears at a Senate confirmation hearing Senate on Tuesday where his policy views will be put under a microscope.

The US Senate Banking Committee holds a hearing on Tuesday to confirm Mr. Powell to succeed Janet L. Yellen at the Federal Reserve.

“Apart from continuity in the Fed’s stance to gradually hike rates, Powell is on board with the unwinding of the Fed’s balance sheet to $2.5-3 trillion from $4.5 trillion,” DBS Group’s FX Strategist Philip Wee said in a note.

Landbank’s Mr. Dumalagan added that the peso may rode to the stronger euro brought by the “upbeat Eurozone data and positive assessments from [European Central Bank] President [Mario] Draghi last week.”

Traders are expecting the peso to move higher today, playing between P50.30 and P50.80.

The dollar index, which measures the greenback against a basket of six major currencies, was flat at 0523 GMT, while US bond yields were unmoved from Friday’s levels. — with Reuters