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Peso down on strong jobs data

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THE PESO weakened versus the dollar yesterday due to better-than-expected jobs data in the United States, as market players anticipated fresh hints from the Federal Reserve on the timing of its next moves.

The local unit closed at P50.355 on Monday, 19.5 centavos weaker than Friday’s close of P50.16 against the greenback. Yesterday’s exchange rate was the weakest since the P50.39-per-dollar close recorded on Aug. 2.

The currency opened at P50.30, already weaker than Friday’s finish. It touched P50.25 per dollar as its best showing, but sank to as low as P50.375 before settling at the closing rate.

Two traders said the peso’s depreciation tracked the movement of other Asian currencies as the dollar gained strength on the back of the higher turnout of US non-farm payrolls (NFP) last week.

“It’s because of the better-than-expected non-farm payrolls data. Major currencies especially the euro weakened versus the dollar due to that,” one trader said in a phone interview, noting that there was stronger demand for the greenback this week.

“Most likely due to the NFP number, the market would be rather buying the dollar.”

Last week, the US Labor department reported that 209,000 new jobs were created in July, against market expectations of 180,000, Reuters said in a report. Average hourly earnings also increased by nine cents or 0.3%, the fastest climb in five months, which could lend some assurance to Fed policy makers that inflation will gradually rise to the US central bank’s 2% target.

The trader said investors may also be waiting for cues from the speeches of Fed officials James Bullard and Neel Kashkari scheduled later on Monday as they scout for hints on future monetary policy decisions, including the unwinding of the Fed’s bond holdings.

The release of latest US inflation data on Friday is also being anticipated, the trader pointed out.

“The dollar sell-off has been pretty sharp, so there will be a bounce in the dollar in the coming days,” another trader said, noting that the greenback could strengthen for the rest of the week.

Dollars traded on Monday amounted to $428.9 million, lower than the $631.3 million that exchanged hands last Friday. Both traders said the volume was lower than average, with one trader noting that this level will likely be sustained over the next few days.

For today, both traders said the peso may range between P50.30-P50.50 versus the greenback. — Melissa Luz T. Lopez

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