THE PESO moved sideways on Friday as the US Federal Reserve hinted it is done with rate cuts for the year and as the market looked for more solid developments in the US-China trade talks.
The local unit closed at P50.65 against the greenback on Friday, stronger by three centavos from its P50.68 finish on Thursday, according to data from the Bankers’ Association of the Philippines.
However, the peso depreciated by 16 centavos from its close of P50.49 on Nov. 11.
The peso opened at P50.6 to a dollar. Its weakest point for the day was at P50.55, while its intraday best was at P50.67 against the greenback.
Dollars traded on Friday slipped to $1.116 billion from $1.17 billion recorded on Thursday.
One trader said the peso moved sideways as there was “no big moving headline”.
“Trading was sideways manner today as not much happened. It remains to be headline tone and we still see uncertainty on the US-China,” the trader said in a phone call on Friday.
Meanwhile, another trader said markets followed the speech of key officials from the US Federal Reserve on Thursday night.
“The trading was guided by last night’s development when three Fed members spoke, and with Fed Chair[man] [Jerome C.] Powell] reiterating the US economy is still relatively healthy implying they won’t cut rates anymore for the rest of 2019,” the second trader said in a phone call.
China and the United States are holding “in-depth” discussions on a first phase trade agreement, and cancelling tariffs is an important condition to reaching a deal, the Chinese commerce ministry said on Thursday.
The degree of tariff cancellation should fully reflect the importance of a ‘phase one’ agreement, ministry spokesman Gao Feng told a regular briefing.
“China has emphasized many times that the trade war began with additional tariffs and should end with the cancellation of additional tariffs,” said Mr. Gao.
Meanwhile, Federal Reserve Chair Jerome Powell on Thursday said the risk of the US economy facing a dramatic bust is remote, partly because the record-long expansion is notable for not having pockets of overheating activity.
Mr. Powell, appearing before US lawmakers for a second day, reiterated his view that the current expansion appears to be on a sustainable footing, with few indications of an imminent downturn despite risks from the long-running US-China trade war, a slowdown in business investment and weakness abroad.
“The US economy is the star economy these days,” Mr. Powell told the House of Representatives Budget Committee. “We’re growing at 2%, right in that range, more than any of the other advanced economies are growing. There’s no reason that can’t continue.”
The Federal Open Market Committee is set to hold its last policy setting meeting on Dec. 18-19.
The US economy is in its 11th year of expansion, although growth this year has slowed from 2018 when the Republican tax cuts fed an acceleration in activity. In the third quarter, the economy grew at a 1.9% annualized pace, down from 3.4% in the comparable period a year earlier. — L.W.T. Noble with Reuters