Peso seen to move sideways vs dollar
THE PESO is seen to move sideways against the US dollar this week amid easing geopolitical tensions and expected mixed economic data in the United States.
The local currency skidded further on Friday, closing the session at P52.70 against the greenback. Friday’s closing was 15 centavos weaker than the P52.55-per-dollar finish on Thursday and was its weakest in nearly 12 years.
Week-on-week, the peso also fell from its P52.33 finish on May 18.
In an interview on Friday, Union Bank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion said foreign exchange traders are on a wait-and-see mode due to lack of fresh catalysts.
“There’s not much data coming out. We’ll just wait for what’s going to happen or surprise again,” Mr. Asuncion told BusinessWorld on the sidelines of the Aboitiz-led lender’s annual stockholders’ meeting in Pasig City.
Land Bank of the Philippines (LANDBANK) market economist Guian Angelo S. Dumalagan said over the weekend that the greenback is expected to weaken in the first three days of the week.
“[I]nvestors may regain their appetite for riskier currencies due to positive developments in the geopolitical front and lukewarm US data,” Mr. Dumalagan said in an e-mail.
Reuters reported US President Donald J. Trump was still looking at the June 12 summit with North Korean leader Kim Jong Un. This came three days after Mr. Trump sent a letter to Mr. Kim cancelling the summit based on North Korea’s “tremendous anger and open hostility.”
Meanwhile, Mr. Trump allowed China’s ZTE Corp. to resume operations after the firm paid a fine and made management changes.
“Such move is seen to increase the chances of a productive trade negotiation between the US and China,” Mr. Dumalagan said, adding that the greenback might show additional downward bias after US reports showed mixed readings on Friday.
“Durable goods orders declined overall in April 2018, even as the core component showed some gain,” Mr. Dumalagan said. “Consumer sentiment, meanwhile, remained relatively high in May 2018, despite being revised downwards.”
However, LANDBANK’s market economist noted the dollar might regain its strength starting Thursday on the back of firm US economic data.
“These reports, along with expectations of firm US data on nonfarm payrolls and unemployment rate, should help support views of a June 2018 US rate hike,” Mr. Dumalagan added.
For this week, Mr. Dumalagan sees the peso moving between P52.20 and P52.90.
“The main factors that could reverse the dollar’s projected downward bias include better-than-expected US PCE (personal consumption expenditures) inflation and GDP growth, hawkish remarks from US policy makers, and unexpected re-escalation in global geopolitical noise,” he noted.
Meanwhile, Mr. Asuncion gave a P52.40-P52.80 forecast range. — Karl Angelo N. Vidal
