THE PESO is seen to weaken against the dollar for the rest of the week as investors expect the minutes of the latest meeting of the US Federal Reserve to support further monetary policy tightening.
The local currency ended Monday’s session at P53.38 versus the greenback, 4.5 centavos stronger than the P53.425-per-dollar finish on Friday.
Land Bank of the Philippines market economist Guian Angelo S. Dumalagan said the peso might give up some of its gains as the market reopens on Wednesday due to likely hawkish minutes from the July 31-Aug. 1 Fed meeting.
“The dollar’s uptrend might continue until Thursday, as the minutes of the latest US monetary policy meeting may once again affirm views of more US rate hikes this year,” Mr. Dumalagan said in an e-mail.
The US central bank’s Federal Open Market Committee opted to leave policy rates unchanged at its last meeting. However, the Fed is widely expected to tighten its benchmark rates at its next meeting next month.
The possible recovery in US existing home sales, Mr. Dumalagan said, could further reinforce the possible hawkish tone of the Fed which will lead to the dollar’s uptick.
However, he added the dollar might move sideways with a downward bias amid positive policy meeting accounts of the European Central Bank (ECB) as well as mixed US and European economic data
“The latest policy meeting accounts may once again reiterate the ECB’s plan to end its bond buying program this year and hike its policy rates by mid-2019,” Mr. Dumalagan noted.
Meanwhile, a foreign exchange trader said the peso will likely move sideways for the rest of the week should the risk appetite among investors remain elevated due to subdued geopolitical tensions.
“The peso might trade the same way. If there’s a shift to a risk-off sentiment due to geopolitical risks, we might see the dollar-peso trading near P53.40-P53.50,” the trader said in a phone interview on Monday.
The trader added that investors are looking at the low-level talks between the United States and China later this week as well as the trade tensions between US and Russia.
China-US talks would take place in Washington on Aug. 21-22, reports suggested, just before US tariffs on Chinese exports and Beijing’s tit-for-tat action are due to take effect.
For the week, Mr. Dumalagan expects the peso to trade between P52.80 and P53.60 versus the dollar, while the trader gave a P53.30-P53.45 range. — Karl Angelo N. Vidal
