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Peso drops on positive US data

peso drops on positive us data 816x445 - Peso drops on positive US data
peso dollar bills 040318 - Peso drops on positive US data

THE PESO declined slightly against the dollar on Wednesday, dragged by upbeat consumer sentiment data in the United States as well as persistent risk-off sentiment due to the trade war between the US and China.

The local unit closed the session yesterday at P52.35 versus the greenback, five centavos weaker than the P52.30 finish on Tuesday.

The peso opened the session at its best showing of the day at P52.33 versus the dollar. Meanwhile, its intraday low stood at P52.43.

Trading volume thinned to $873.2 million from the $913.8 million that changed hands the previous session.

A trader said the peso was weaker versus the dollar following the greenback’s ascent overnight due to higher-than-expected US consumer confidence data.

The consumer confidence index of the Conference Board climbed to a six-month high of 134.1 in May, signalling strong job market and rising wages in the US.

“The dollar-peso traded higher throughout the day since there was still risk-off sentiment in the market given that trade tensions are still looming around and are still in the headlines,” the trader said in a phone interview.

“The peso weakened today on heightened global trade uncertainties after US President Trump intended to address its trade imbalances with Japan and noted that he is not yet leaning towards a trade deal with China,” another trader said on Wednesday.

Meanwhile, the first trader said news about the US blaming Iran for the attack of four commercial cargo ships off the coast of the United Arab Emirates would “somehow add to the risk-off sentiment already in the market.”

For today, both traders expect the peso to trade between P52.25 and P52.45.

“The local currency might weaken ahead of the BSP (Bangko Sentral ng Pilipinas) reserve requirement cut effectivity on Friday,” the second trader said. — KANV

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