Peso inches up before key US inflation report
THE PESO rose further against the dollar on Wednesday as the market awaits the July US consumer price index (CPI) report, which could cement expectations of a September rate cut by the US Federal Reserve.
The local unit closed at P56.955 per dollar on Wednesday, inching up by half a centavo from its P56.96 finish on Tuesday, Bankers Association of the Philippines data showed.
This was the peso’s strongest showing in almost four months or since its P56.808-a-dollar close on April 15.
The peso opened Tuesday’s session stronger at P56.90 against the dollar. Its weakest showing was at P57.12, while its intraday best was at P56.835 versus the greenback.
Dollars exchanged went down to $1.34 billion on Wednesday from $1.799 billion on Tuesday.
“The peso-dollar moved sideways ahead of the figures of US inflation later. The market is expecting higher US CPI. We saw some slight buying earlier in the session due to bets of higher-than-expected CPI data,” a trader said by phone.
The peso appreciated slightly amid the dollar’s decline after the release of US producer price index (PPI) data overnight, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
The dollar hovered near a one-week low on Wednesday as traders bet US consumer price data later in the day will keep the Fed on course to cut rates next month, Reuters reported.
Traders were largely cautious ahead of US inflation data at 1230 GMT (8:30 a.m. ET), which is expected to show consumer prices increased 0.2% in July, on a month-on-month basis, following a 0.1% decline a month ago.
The dollar index — which measures the greenback against other major currencies — dipped 0.1% to 102.52, after slumping 0.5% on Tuesday when a slower-than-expected rise in producer prices reinforced hopes of a US rate cut next month.
Traders had been widely expecting a rate cut in September before the producer price data and ramped up bets for a super-sized 50-basis-point cut after the release to 52.5% from 50% a day earlier, according to CME’s FedWatch Tool.
For Thursday, the trader said the peso’s movement against the dollar would depend on the Philippine central bank’s policy decision.
The trader expects the peso to move between P56.80 and P57.20 per dollar, while Mr. Ricafort sees it ranging from P56.85 to P57.05. — A.M.C. Sy with Reuters
