THE PESO will likely move sideways against the dollar this week as investors look at the continuous trade tensions abroad amid strong labor data in the United States.
The local unit ended last week at P53.73 versus the greenback, easing slightly from the previous close rate of P53.80, which was its weakest level in nearly 13 years.
Week on week, the peso sank from its P53.475-per-dollar finish on Aug. 31.
A foreign exchange trader said markets will be looking at “geopolitical risks from the US” such as its trade spat with China as well as talks to revamp the North American Free Trade Agreement.
US President Donald J. Trump warned on Friday he was ready to slap tariffs on another $267 billion worth of Chinese imports on top of the $200 billion set to be imposed soon, Reuters reported
Meanwhile, Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, said the dollar could move sideways with a slight downward bias versus the local unit amid “relatively balanced pressures domestically and abroad.”
The dollar might start the week on a strong note on the back of “upbeat” US labor report.
The US added 201,000 more jobs in August, more than the 192,000 expected by the market. Meanwhile, unemployment rate remained unchanged at 3.9%.
“These strong reports suggest that the US central bank remains on track to hiking rates again in September and December this year,” Mr. Dumalagan said.
On Tuesday and Wednesday, the peso may bounce back as Mr. Dumalagan noted the dollar may “move with a downward bias” as traders lock in gains amid speculations of another rate hike from the Bangko Sentral ng Pilipinas as well as the potential annual rebound of Philippine exports.
“Separately, Philippine exports are expected to show an annual growth in July after a series of softening annual declines,” Mr. Dumalagan added. “These should help improve the peso’s appeal, tempering the dollar’s strength against the local currency.”
Toward the end of the week, the market economist noted, the dollar may bounce back due to “possibly strong” US data on producer and consumer price inflation. This may be reinforced by “safe-haven buying amid lingering US-China trade tension.”
For this week, Mr. Dumalagan expects the peso to move between P53.40 and P54, while the trader gave a P53.55-P53.95 range. — Karl Angelo N. Vidal