Peso drops vs dollar before US inflation report
THE PESO weakened anew against dollar on Wednesday on market caution ahead of the February US consumer price index (CPI) data set to be released overnight, which could affect the US Federal Reserve’s policy actions.
The local unit closed at P57.36 per dollar on Wednesday, shedding 13.5 centavos from its P57.225 finish on Tuesday, Bankers Association of the Philippines data showed.
The peso opened Wednesday’s trading session weaker at P57.30 against the dollar. Its worst showing was at P57.395, while its intraday best was at P57.29 versus the greenback.
Dollars exchanged declined to $1.16 billion from $1.38 billion on Tuesday.
“The peso closed lower on a broad dollar rebound in anticipation of the US CPI release tonight, which is expected to be lower year on year, But some players in the market see it as still elevated, which may be reason for the Fed not to cut yet,” a trader said in a phone interview on Wednesday.
The dollar rose slightly amid more developments in the Trump administration’s tariff policies, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
For Thursday, the trader expects the peso to move between P57 and P57.50 per dollar, while Mr. Ricafort sees it ranging from P57.20 to P57.40.
The dollar struggled on Wednesday to lift off a five-month low against major peers, as worries about the US economy simmered in view of President Donald J. Trump’s unpredictable trade policies, Reuters reported.
The euro hovered around a five-month peak on increased optimism for an end to the war in Ukraine.
The Canadian dollar was steady after a volatile session on Tuesday, when Mr. Trump pledged to double tariffs on steel and aluminum to 50%, only to reverse course just hours later.
The US dollar index which measures the currency against a basket of six major peers, edged up 0.08% to 103.53 in Asian trading hours, following Tuesday’s slide of 0.46% that took it as low as 103.21 for the first time since Oct. 16.
A run of softer US economic data continued on Tuesday with small-business confidence dropping for a third straight month in February.
Investors have been on edge since Mr. Trump avoided ruling out the possibility that a recession would result from his trade policies in an interview on Sunday with Fox News.
Wednesday’s CPI report may be setting the market up for “a lose-lose situation”, said Julien Lafargue, chief market strategist at Barclays Private Bank.
“A higher-than-expected reading could fuel the stagflation narrative while a weaker-than-expected print could cement recession fears. What the market really needs at this point is better visibility on growth rather than on inflation.” — A.M.C. Sy with Reuters
