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Peso climbs vs dollar on slower US GDP growth

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THE PESO strengthened against the dollar Thursday following revised fourth-quarter US growth data, which showed that the world’s largest economy expanded at a slightly slower pace than previously thought.

The local currency ended Thursday’s session at P51.92 versus the greenback, 18 centavos stronger than its P52.10-per-dollar close on Wednesday.

The peso opened Thursday’s session slightly stronger at P52.07 versus the dollar, while its intraday high stood at P51.905. The peso’s worst showing, meanwhile, landed at P52.10 against the greenback.

Dollars traded rose to $863.5 million from the $652.1 million that changed hands in the previous session.

A trader said in an e-mail that the peso strengthened Thursday “due to profit taking amid slower US GDP (gross domestic product) growth data.”

The US Commerce Department said on Wednesday that the US economy grew at an annualized pace of 2.5%, slower than the 2.6% reading and the 3.2% pace logged in the third quarter of last year.

However, the 2.5% GDP growth was in line with the forecasts of economists.

“The deceleration in real GDP growth in the fourth quarter reflected a downturn in private inventory investment,” the report from Bureau of Economic Analysis read, adding that it was partially offset by personal consumption expenditures, exports as well as state and federal government spending among others.

On the other hand, the trader also attributed the peso’s strengthening to the “weaker home sales data.”

Pending home sales in the US, based on signed contracts, fell 4.7% in January month-on-month, its lowest in four year, according to the National Association of Realtors.

Meanwhile, another trader said in a phone interview that the market saw some “heavy selling” in the afternoon trading session as players reduced their long dollar positions.

“Come afternoon, we saw some heavy selling across the board. Everyone’s just selling. I think it’s more of reduction of positions that’s why we close at the [high].”

For Friday, the second trader sees the peso moving between P51.80 and P52.05, while the first trader gave a wider forecast range of P51.85 to P52.15.

Meanwhile, most other Asian currencies lost ground against the dollar on Thursday as Federal Reserve chief Jerome Powell hinted that US borrowing costs might rise at a faster pace than expected in a blow to riskier markets. — Karl Angelo N. Vidal with Reuters