Peso strengthens on soft US data
THE PESO strengthened on Thursday as weak US economic data weighed on the dollar.
The local unit closed at P55.62 per dollar, rising by 15.1 centavos from its P55.771 finish on Wednesday, Bankers Association of the Philippines data showed.
The peso opened Thursday’s session stronger at P55.635 against the dollar. It traded better than Wednesday’s close the entire session as its worst showing was at just P55.70, while its intraday best was at P55.56 versus the greenback.
Dollars traded jumped to $1.77 billion on Thursday from $1.36 billion on Wednesday.
“The peso appreciated after the latest ADP private payrolls report came in way weaker than market expectations, raising renewed concerns on the US labor market,” a trader said in an e-mail.
The dollar drifted in muted trading on Thursday after weak US economic data revived fears of slow growth and high inflation, Reuters reported.
The soft data, which showed US services sector contracted for the first time in nearly a year in May and an easing labor market, led to a rally in Treasuries and increased the odds of interest rate cuts from the US Federal Reserve this year.
In Asian hours, currency market moves were tepid as investors were hesitant in making major bets, awaiting developments for fresh cues on the economy, tariffs and trade deals. The dollar index, which measures the US currency against six others, was at 98.87 and has dropped about 9% this year, poised for its weakest yearly performance since 2017.
Investors are now awaiting Friday’s monthly payrolls figures to gauge the state of the labor market after payroll processing firm ADP reported that US private payrolls increased far less than expected in May.
The peso was also supported by benign May inflation data, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
Headline inflation slowed to an over five-year low of 1.3% in May from 1.4% in April and 3.9% the same month a year ago, the government reported on Thursday. — Luisa Maria Jacinta C. Jocson with Reuters
This matched the median estimate yielded in a BusinessWorld poll of 17 analysts conducted last week and was within the Bangko Sentral ng Pilipinas’ 0.9%-1.7% forecast for the month.
This also marked the fourth straight month of deceleration and tenth straight month of inflation settling within the 2-4% target band.
For the first five months, inflation averaged 1.9%.
Philippine financial markets are closed on Friday (June 6) due to the Eid’l Adha holiday. — Luisa Maria Jacinta C. Jocson with Reuters
