PHILIPPINE STAR/WALTER BOLLOZOS

THE PESO weakened further against the dollar on Monday amid expectations that the US Federal Reserve will keep its target rate unchanged at its policy meeting this week.

The local unit closed at P57.20 per dollar, dropping by nine centavos from its P57.11 finish on Friday, Bankers Association of the Philippines data showed.

The peso opened Monday’s session slightly weaker at P57.13 against the dollar. Its intraday best was at P56.98, while its worst showing was at P57.21 against the greenback.

Dollars exchanged increased to $1.699 billion on Monday from $1.64 billion on Friday.

“The dollar-peso ended higher amid cautious trading ahead of the FOMC (Federal Open Market Committee) meeting later this week,” a trader said in a phone interview.

The dollar was generally stronger on Monday as the Fed is expected to keep borrowing costs unchanged, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Tuesday, the trader sees the peso moving between P56.90 and P57.30 per dollar, while Mr. Ricafort expects it to range from P57.10 to P57.35.

The dollar rose against major peers on Monday after the United States and the European Union (EU) struck a framework trade pact, the latest in a flurry of deals to avert a global trade war, with investors also looking to this week’s US and Japanese central bank meetings, Reuters reported.

Meeting in Scotland on Sunday, US President Donald J. Trump and European Commission President Ursula von der Leyen said the deal provided for an import tariff of 15% on EU goods, half the rate Mr. Trump had threatened from Aug. 1.

That follows last week’s US agreement with Japan, while top US and Chinese economic officials will resume talks in Stockholm on Monday aiming to extend a truce by three months and keep sharply higher tariffs at bay.

The euro was last at $1.1693, down 0.4% on the day, reversing an initial knee-jerk rise in Asia trade as investors’ focus shifted to what an easing in global trade tensions meant for the dollar overall.

The dollar was stronger elsewhere, up 0.15% on the yen at 147.83, while the pound was down 0.13% at $1.3428.

As concerns subside about the economic fallout from punishing tariffs, investor attention is shifting to corporate earnings and central bank meetings in the United States and Japan in the next few days.

Both the Fed and the Bank of Japan are expected to hold rates steady at policy meetings this week, but traders will watch subsequent comments to gauge the timing of the next moves.

Investors will also be watching to see Mr. Trump’s reaction to the Fed’s decision.

The US president has been putting the Fed under heavy pressure to make significant rate cuts, and Mr. Trump appeared close to trying to fire Fed Chair Jerome H. Powell last week, but backed off with a nod to the market disruption that would likely follow. — Aaron Michael C. Sy with Reuters

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