THE PESO weakened versus the greenback on Monday following better US jobs data, which could cause the Federal Reserve to quicken the reduction of its bond purchases.

The local unit ended trading at P50.41 per dollar on Monday, shedding five centavos from its P50.36 close on Friday, based on data from the Bankers Association of the Philippines.

The peso opened Monday’s session weaker from Friday’s close at P50.43 against the dollar. Its worst showing was at P50.44, while its intraday best was at P50.32 versus the greenback.

Dollars exchanged declined to $690.84 million on Monday from $959.85 million on Friday.

A trader said in a Viber message that the peso weakened due the upbeat US labor market data released on Friday, as this could make the Fed increase the pace of the tapering of its asset purchases.

US employment growth slowed considerably in November amid job losses at retailers and in local government education, but the unemployment rate plunged to a 21-month low of 4.2%, suggesting the labor market was rapidly tightening, Reuters reported.

The four-tenths-of-a-percentage-point drop in the jobless rate from October reported by the US Labor department in its closely watched employment report on Friday occurred even as 594,000 people entered the labor force, the most in 13 months. Workers put in more hours, boosting aggregate wages, which should help to underpin consumer spending.

The survey of businesses showed nonfarm payrolls increased by 210,000 jobs, the fewest since last December. But the economy created 82,000 more jobs than initially reported in September and October, a sign of strength. That left employment 3.9 million jobs below the peak in February 2020.

Despite November’s slowdown in hiring, which also reflected a small gain in the leisure and hospitality industry, 6.1 million jobs have been added this year. The unemployment rate has declined by a whopping 2.1 percentage points since January.

Economists say the economy is very close to maximum employment, making an early interest rate increase from the US Federal Reserve possible.

Fed Chair Jerome H. Powell told lawmakers last week that the US central bank should consider speeding up the winding down of its massive bond purchases at its Dec. 14-15 policy meeting.

Employment growth was held back by a decline of 20,400 jobs in the retail sector. State and local government education employment fell by 12,600 jobs. That led to a drop of 25,000 in overall government jobs, the fourth straight monthly decrease.

Pandemic-related staffing fluctuations have distorted normal seasonal patterns in state and local government education.

November’s modest job growth did little to temper expectations that the economy was poised for stronger growth this quarter after hitting a speed bump in the third quarter.

The peso also depreciated on safe-haven demand as US stocks declined, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Dow Jones Industrial Average closed down 0.17% on Friday, while the S&P 500 and the Nasdaq Composite shed 0.84% and 1.92% on Friday, Reuters reported.

For Tuesday, Mr. Ricafort gave a forecast range of P50.33 to P50.53, while the trader expects the local unit to move within P50.33 to P50.53. — L.W.T. Noble with Reuters