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Peso to move within tight range after positive US data

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PHILSTAR/KJ ROSALES

THE PESO will likely move sideways against the dollar this week on the back of likely mixed economic data in the United States and as well as potentially weak Philippine trade figures.

The peso ended the week at P53.42 against the greenback, flat from its close on Thursday.

Week on week, Friday’s closing rate was however weaker than the P53.34-per-dollar finish on July 1.

“We’re expecting the peso to continue to trade within a very tight range this week as the market will take cue from the US unemployment data,” a trader said in a phone interview on Friday.

The US economy added 213,000 jobs in June, data released on Friday showed, versus the 195,000 market expectation in a Reuters poll.

However, unemployment rose to four percent in the same month as more people sought new jobs.

“The latest US labor reports were strong enough to confirm the health of the US economy, but not excessively upbeat to fuel speculations of even more aggressive moves from the US Federal Reserve,” Land Bank of the Philippines market economist Guian Angelo S. Dumalagan said in an e-mail.

Despite the mixed labor report, analysts said trade concerns will continue to weigh on market sentiment.

The $34 billion worth of tariffs on Chinese goods slapped by US President Donald J. Trump took effect on Friday. In return, China said imported US goods including cars, soybeans and lobsters facing 25% levies, Reuters reported.

“While the trade war between the US and China could support safe-haven demand, the dollar might not fully benefit from it…as investors over the weekend focused their attention more on the possible negative impact of the trade war on the US economy,” Mr. Dumalagan said.

Toward the end of the week, Mr. Dumalagan noted the dollar might rebound against the local unit due to possibly strong US reports on producer and consumer price inflation and a potentially wider local trade deficit.

“While the possible widening of the Philippine trade deficit is a reflection of the country’s upbeat investment spending, some market participants might interpret the report negatively, looking at its subtractive role in the expenditure approach in computing gross domestic product,” he said.

For this week, the trader sees the peso to move between P53.30 and P53.55, while Mr. Dumalagan gave a wider P53-P53.60 range. — Karl Angelo N. Vidal