THE PESO may rebound against the dollar this week following the release of softer US consumer inflation data, which would allow US Federal Reserve to continue its easing cycle.
On Friday, the local unit closed at P58.625 per dollar, slipping by 1.5 centavos from its P58.61 finish on Thursday, data from the Bankers Association of the Philippines showed. This was a fresh near nine-month low for the peso.
Week on week, the peso plunged by 46.5 centavos from its P58.16 close on Oct. 17.
A trader said the local unit mostly moved sideways against the dollar on Friday on cautious trading before the release of the much-awaited US consumer price index (CPI) report.
The dollar was also generally stronger as gold prices continued to rise, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
In the Asian session on Friday, the US dollar was steady as investors braced for delayed inflation data that showed US consumer prices increased less than expected in September, keeping the Federal Reserve on track to cut interest rates again this week, Reuters reported.
Trade war worries were also back on the agenda after US President Donald J. Trump said all trade talks with Canada were terminated following what he called a fraudulent advertisement by the province of Ontario in which former President Ronald Reagan spoke negatively about tariffs.
The US CPI rose 0.3% last month and 3% in the 12 months through September. Economists polled by Reuters had forecast the CPI increasing by 0.4% for the month and rising 3.1% year on year.
The CPI report was published despite an economic data blackout because of the government shutdown. The figure, used by the Social Security Administration to calculate its cost-of-living adjustment for millions of retirees and other benefits recipients, was initially due on Oct. 15.
Following the data release, the US dollar index was last down 0.021% at 98.934 after earlier falling as much as 0.2%.
The Fed is expected to reduce rates two more times this year, with a quarter-percentage-point cut baked in for the Oct. 28-29 meeting, according to LSEG calculations using rate futures.
With that rate move already factored into asset prices, markets are likely to be more sensitive to any forward-looking language from Fed Chair Jerome H. Powell, with the central bank expected to cut rates further at its next meeting in December.
Possibly clouding the Fed’s decision-making ability is the lack of data provided by the government since its shutdown began on Oct. 1, including delays in employment releases at a time of simmering worries about the health of the labor market.
For this week, the trader said the peso could rebound as the softer-than-expected US consumer inflation report strengthens the dovish Fed outlook.
The trader sees the peso moving between P58.20 and P58.60 per dollar this week, while Mr. Ricafort sees it ranging from P58.35 to P58.85. — A.M.C. Sywith Reuters