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Peso weakens against the dollar on US non-manufacturing data

peso weakens against the dollar on us non manufacturing data 816x544 - Peso weakens against the dollar on US non-manufacturing data

THE PESO weakened against the dollar on Wednesday following its rally amid better-than-expected US data reported late Tuesday.

The local unit finished trading at P50.61 against the greenback on Wednesday, depreciating by 20 centavos from the P50.41-to-a-dollar close on Tuesday.

The peso started the trading session at P50.55 versus the dollar. Its weakest point for the day was at P50.70, while its intraday best was at P50.45 against the greenback.

Dollars traded on Wednesday slipped to $1.112 billion from $1.188 billion recorded on Tuesday.

One trader said that the peso’s weakness after days of dominance against the dollar was due to strong US data released on Tuesday night.

“The greenback regained its ground against the peso with the better US ISM (Institute for Supply Management) as it recovered from a contraction and even went beyond the 50-level forecast. It turned around and it was a pleasant surprise for the market,” a trader said in a phone call.

Another trader echoed this sentiment, but maintained that risk-on sentiment is still present in the market, which could support the local unit.

“Dollar got stronger across the board after the US ISM non-manufacturing data bounced back after a three-year low. The market had a mixed reaction so trading was sideways as there was buying and selling,” another trader said by phone.

A survey on the vast US service sector published on Tuesday showed that business sentiment had improved in October from a three-year low in September.

The US ISM non-manufacturing sector index rose to 54.7 from 52.6 in September, beating market expectations.

The rebound is a welcome sign for dollar bulls as a fall in the index would have suggested that malaise in trade war-hit manufacturers was infecting the service sector, too.

The data came after strong a US employment report on Friday.

For today, the first trader forecasts a trading range of P50.55-50.80 against the dollar, while the second trader said the local unit could move around the P50.40-50.70 band.

Most emerging Asian currencies eased on Wednesday with the Thai baht dropping ahead of a central bank policy rate decision, while the Chinese yuan firmed below 7 per dollar after the People’s Bank of China fixed the daily midpoint at its strongest level for three months.

Regional markets tested gains made earlier in the week as investors awaited concrete details from the Sino-US trade front, with a report suggesting that the United States was considering certain tariff concessions on China.

China is also insisting that the United States remove tariffs imposed in September as a part of the “phase one” trade deal, which is expected to be signed this month at a yet-to-be-determined location.

“Market sentiment has turned a bit more tentative on latest trade war news,” OCBC said in a note to clients, adding that if Chinese insistence for concessions represented a “hardened stance,” then the chances of a deal were less likely than markets expected.

The Indonesian rupiah dipped 0.25%, with the currency holding at a level of about 14,000 a dollar.

Bucking the trend, the Chinese yuan rose about 0.13% after the People’s Bank of China set its yuan midpoint at a three-month high. — L.W.T. Noble with Reuters

The post Peso weakens against the dollar on US non-manufacturing data appeared first on BusinessWorld.

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