THE PESO may weaken against the dollar this week as developments in the European Union (EU) and United States are expected to boost safe-haven buying in favor of the dollar.
The local currency ended last week at P52.45 against the dollar, down four centavos from the previous day, as players covered their short dollar positions.
Week on week, however, it strengthened from the P52.715-per-dollar finish last Nov. 16.
Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, said the dollar is seen to appreciate against the peso on safe-haven buying following the EU Brexit Summit as well as likely hawkish statements from US Federal Reserve Chair Jerome Powell.
In the first three days of the week, Mr. Dumalagan said the greenback might move sideways as members of the EU are set to finalize a deal on United Kingdom’s departure from the political bloc.
“However, even if the Brexit deal would be approved by the EU, it still has to hurdle the UK parliament, which is known to have numerous objections about the proposed agreement,” he said in an e-mail.
The dollar could strengthen further towards the end of the week, the market economist said, as Mr. Powell is expected to deliver a hawkish speech which will affirm views of more policy tightening ahead even as the central banker may continue to flag global slowdown in economic growth.
He also noted that the US personal consumption expenditure price index, the Fed’s preferred inflation gauge, may remain flat at 2% which is at par with the central bank’s inflation target. US third-quarter gross domestic product growth may likewise be affirmed at 3.5%, sending the same upbeat personal income and spending for October.
Meanwhile, Michael L. Ricafort, Rizal Commercial Banking Corp. economist, said there might be “some slight upward correction” in the dollar-peso should the government’s budget deficit grew wider “as spending data could have increased beyond the state’s program as reported earlier.”
The government’s October fiscal performance data will be released today.
Meanwhile, Mr. Ricafort said the peso might decline if the US-China trade war continues to expand despite talks between its leaders Donald Trump and Xi Jinping later this month.
However, he noted that lower global oil prices, still at their best level in nearly six months, may offset the slight depreciation.
For this week, Mr. Ricafort expects the peso to trade between P52.10 and P52.40 this week, while Mr. Dumalagan gave a P52.10-P52.80 range. — K.A.N. Vidal

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