By BusinessWorld,Cedtyclea

Copyright bworldonline

THE PESO continued to rise against the dollar on Wednesday as markets looked ahead to the US Federal Reserve’s policy decision overnight, with focus mainly on potential clues on further easing in the coming months.

The local unit closed at P56.89 versus the greenback, inching up by two centavos from its P56.91 finish on Tuesday, Bankers Association of the Philippines data showed.

The peso opened Wednesday’s session sharply stronger at P56.80 versus the dollar. Its intraday high was at P56.75, while its worst showing was at P56.945 against the greenback.

Dollars exchanged fell to $1.49 billion on Wednesday from $1.95 billion on Tuesday.

“The pair initially traded lower on growing bets of Fed rate cuts, but higher-than-expected US retail sales data pushed the dollar-peso to recover and finish the trading session at P56.89,” a trader said in a phone interview.

The peso inched higher as the greenback touched a multi-month low early in the Asian session on expectations that the Fed would signal more cuts to support the world’s largest economy amid weak data recently, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Thursday, the trader sees the peso moving between P56.60 and P57 per dollar, while Mr. Ricafort expects it to range from P56.80 to P57.05.

Early in the Asian session, the dollar was on the defensive as global markets counted down to an anticipated rate cut by the Federal Reserve later in the day and waited on signals around the extent of future easing, Reuters reported.

The Fed was expected to cut its benchmark interest rate by a quarter of a percentage point to the 4.%-4.25% range at the end of its monetary policy meeting later in the global day.

The main focus beyond the rate decision will be on Fed Chair Jerome H. Powell’s comments on the outlook for US monetary policy.

“Markets are effectively daring the Fed to over-deliver on the dovish side,” said Dilin Wu, research strategist at Pepperstone. “The bigger question, though, is whether Powell can satisfy markets already leaning heavily on a dovish view, or whether conditions are ripe for a near-term shakeout in both USD and gold positioning.”

The dollar index, which tracks the greenback against a basket of currencies of other major trading partners, edged up 0.1% to 96.723 after a 0.7% slide on Tuesday to the lowest since early July.

The euro was down 0.1% at $1.1855, after touching $1.1867 on Tuesday, its highest level since September 2021. The dollar was little changed at 146.43 yen following a 0.6% slide in the previous session.

“If the (Fed) chair is more dovish than expected, of course, you would expect that to weigh on the dollar, but really, how much more bearish can you get from here?” Mahjabeen Zaman, head of foreign exchange research at ANZ, said on a podcast. “We’ve already got more than five cuts priced in for the cycle.” — A.M.C. Sy with Reuters