Peso drops to near one-month low on US data, US-China talks

THE PESO weakened to a near one-month low against the dollar on Monday following strong US labor data and as markets anticipate the latest round of trade negotiations between the United States and China.

The local unit closed at P55.81 against the greenback on Monday, sinking by 19 centavos from its P55.62 finish on Thursday, Bankers Association of the Philippines data showed.

This was its worst finish in nearly a month or since it ended at P55.855 per dollar on May 14.

The peso opened Monday’s trading session sharply weaker at P55.85 per dollar. It dropped to a low of P55.88 intraday, while its best showing was at P55.78 versus the greenback.

Dollars traded declined to $767.8 million on Monday from $1.77 billion on Thursday.

“The peso weakened after the latest US jobs reports showed a robust US labor market despite slowing gains on the US nonfarm payrolls in May,” a trader said in an e-mail.

US job growth slowed in May amid uncertainty about the Trump administration’s import tariffs, but solid wage growth should keep the economic expansion on track and potentially allow the US Federal Reserve to delay resuming its interest rate cuts, Reuters reported.

The ebbing labor market momentum reported by the Labor department on Friday was underscored by sharp downward revisions that showed 95,000 fewer jobs were added in March and April than previously estimated over the two-month period.

The unemployment rate held steady at 4.2% for the third consecutive month because 625,000 people dropped out of the labor force, suggesting a lack of confidence in the jobs market. Surveys have shown that consumers are less optimistic about their prospects of finding a job in the event of being laid off.

Nonfarm payrolls increased by 139,000 jobs last month after a downwardly revised rise of 147,000 in April, the Labor department’s Bureau of Labor Statistics said.

Economists polled by Reuters had expected the survey of establishments to show 130,000 jobs added after a previously reported gain of 177,000 in April. The payrolls count for March was slashed by 65,000 to 120,000.

The economy needs to create roughly 100,000 jobs per month to keep up with growth in the working-age population. That number could drop as US President Donald J. Trump has revoked the temporary legal status of hundreds of thousands of migrants as part of his administration’s immigration crackdown.

The peso was also affected by latest updates on the trade talks between the US and China, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Top US and Chinese officials were set to sit down in London on Monday for talks aimed at defusing the high-stakes trade dispute between the two superpowers that has widened in recent weeks beyond tit-for-tat tariffs to export controls over goods and components critical to global supply chains, Reuters reported.

At a still-undisclosed venue in London, the two sides will try to get back on track with a preliminary agreement struck last month in Geneva that had briefly lowered the temperature between Washington and Beijing and fostered relief among investors battered for months by Mr. Trump’s cascade of tariff orders since his return to the White House in January.

Gathering there will be a US delegation led by Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer, and a Chinese contingent helmed by Vice Premier He Lifeng.

The second-round of meetings comes four days after Mr. Trump and Chinese leader Xi Jinping spoke by phone, their first direct interaction since Mr. Trump’s Jan. 20 inauguration.

For Tuesday, the peso may continue to decline before the release of May US consumer inflation data, the trader said. The US consumer price index (CPI) report will be released on Wednesday.

The CPI report will be one of the last key pieces of data before the Federal Reserve’s June 17-18 meeting. The US central bank is widely expected to hold interest rates steady at that meeting, but traders are pricing in nearly two 25-basis-point cuts by the end of the year.

The trader expects the peso to move between P55.65 and P55.90 per dollar on Tuesday, while Mr. Ricafort sees it ranging from P55.70 to P55.90 on Tuesday. — Luisa Maria Jacinta C. Jocson with Reuters