THE PESO will likely trade sideways versus the greenback this week amid geopolitical noise offshore and bets of softer key US economic reports.

The peso closed at P51.49 versus the greenback on Friday, slumping 13.5 centavos from the previous session. Its finish was the local unit’s weakest close in nearly 11 years or since it ended at P51.60 a dollar on Aug. 24, 2006.

Week on week, the local currency lost 51 centavos from a P50.98-per-dollar close last Aug. 11.

An economist from a local bank said the peso may rise versus the dollar this shortened trading week, falling within P50.10 to P50.60, due to external risks, particularly the uncertain direction of US President Donald J. Trump’s economic policies.

“The dollar might depreciate this week due to uncertainty over the Trump administration’s economic agenda and amid expectations of soft US reports on manufacturing, service and housing,” Land Bank of the Philippines (Landbank) Market Economist Guian Angelo S. Dumalagan said in an e-mail over the weekend.

Reuters reported Mr. Trump last week decided to disband the American Manufacturing Council and the Strategic and Policy Forum, raising questions on the US President’s ability to organize the business community.

Today, Mr. Dumalagan said the foreign currency could trade sideways against the peso, still anchored by investor sentiment brought about by economic developments abroad.

“On Tuesday, the dollar might move sideways, as investors begin absorb mixed signals from the US,” Landbank’s economist said. “The positive impact of the better-than-expected US consumer sentiment report might be offset by the negative publicity resulting from the firing of White House senior adviser Steve Bannon.”

For the rest of the week, the greenback could continue trending downwards on the back of the market’s anticipation of weaker reports on manufacturing, services and housing, Mr. Dumalagan said.

“From Wednesday until Friday, the dollar might show a downward bias due to likely weak US data on manufacturing, services, and housing. While these reports are unlikely eliminate the possibility of another US rate hike this year, they could potentially weaken the dollar by affecting market sentiment,” he said.

Markets are anticipating another tightening move from the US Federal Reserve before the year ends. The US central bank had lifted interest rates for the second time this year to within 1% to 1.75% during its June policy meeting.

“The factors that could reverse the dollar’s projected downward trend include better-than-expected US reports on manufacturing, services, and housing as well as heightened political noise in the US,” Mr. Dumalagan said.

Meanwhile, another economist from a local bank said the peso could breach the P51.50-to-the dollar level this week anchored by negative market sentiment driven by offshore uncertainties.

“I see the peso to break further to more than PhP51.50 [this] week with more market volatility and uncertainty brought about by external issues,” Chief Economist at the Union Bank of the Philippines (UnionBank) Ruben Carlo O. Asuncion said in an e-mail on Friday.

He however noted the peso’s anticipated decline this week could be reversed on the back of favorable domestic factors.

“However, I also expect it to be stronger as investors continue to see the strength of the Philippine economic growth with the recent release of robust 2Q (second quarter) GDP (gross domestic product) growth,” Mr. Asuncion said.

The Philippine economy expanded by 6.5% in the second quarter, picking up from the 6.4% recorded in the previous quarter but slower from the 7.1% registered in the comparable period in 2016, which was fuelled by expenditures related to the May 2016 general elections.

Meanwhile, a trader said in a phone interview on Friday that the pair’s trading this week will continue be on a wide range, with its initial support at P51.20 and resistance pegged at the P51.60 level after the peso-dollar’s sessions in the past few days continued to be volatile intraday.

“For now it looks as though that has been the trend, a stronger dollar and a weaker peso. Whenever we see risk-off sentiment happening in the market, it exaggerates the peso’s finish for the day,” the trader said.

For his part, BDO Unibank, Inc.’s Chief Market Strategist Jonathan L. Ravelas said in his weekly peso outlook: “Chart-wise, continue to see the currency to range within P51.15-P51.60 levels [this week.] Watch out for a break above P51.63 as it could test the P52.00 levels.” — Janine Marie D. Soliman

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