THE PESO will likely move sideways against the dollar this week amid mixed economic and political signals abroad.
On Friday, the local unit closed the session at P53.70 versus the greenback, stronger by 26.5 centavos than the previous close, supported by cues from succeeding rate hikes from the local central bank coupled with big fund inflows.
It also strengthened week on week from the P54.13-per-dollar finish last Oct. 12.
Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, said the dollar might move sideways with a downward bias amid mixed signals and ahead of a possible softer economic growth in the United States for the third quarter.
For the first four days of the week, Mr. Dumalagan said the greenback might just move sideways, as “encouraging geopolitical developments” abroad might temper the likely mixed-to-soft data on services and manufacturing reports from the United States and the euro zone, citing positive developments in Italy-EU as well as US-China relations.
“These positive developments could improve investors’ risk appetite, tempering dollar appreciation resulting from the likely remarks of US Fed officials,” Mr. Dumalagan said.
However, a foreign exchange trader on Friday flagged the risk sentiment among investors which may affect currencies in emerging markets.
“Problems in Saudi Arabia could somewhat affect bullishness. There could be a risk aversion and eventually affect emerging market currencies such as ours,” the trader said in a phone interview last Friday.
“If there is no more flow and if risk sours, we can easily just trade weaker as well,” the trader added.
For Friday, Mr. Dumalagan said the dollar might lose its appeal against a basket of currencies on the back of likely hawkish tone of the policy meeting of the European Central Bank (ECB) as well as caution ahead of a possible third-quarter gross domestic product growth slowdown in the US.
“The ECB is expected to affirm its hawkish view of some tightening moves ahead… which could weaken the dollar against the euro and perhaps other currencies,” he said.
For this week, Mr. Dumalagan expects the peso to trade between P53.50 and P54.10, while the trader gave a P53.55-P53.90 range. — Karl Angelo N. Vidal

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