THE PESO is expected to move sideways against the dollar this week on the back of continued optimism on the trade negotiations between US and China and amid dovish bets on the European Central Bank (ECB) policy meeting.
The local currency was flat versus the greenback on Friday, ending the week at P51.70 versus the dollar following stronger-than-expected US gross domestic product growth data.
Week-on-week, the peso strengthened from its P52.065-per-dollar finish last Feb. 23.
“I think we’re still bound to trade within the range. The trade developments between the US and China will still be monitored,” a foreign exchange trader said in a phone interview on Friday.
US President Donald J. Trump and his Chinese counterpart Xi Jinping will likely meet in Mar-a-Lago, Florida a few weeks from now to seal a trade deal.
This was announced after Mr. Trump again postponed a plan to impose $200 million in tariffs on Chinese goods — originally scheduled to take effect on March 1 — citing “substantial progress” in Washington’s trade talks with Beijing.
“In the first two days of the week, the dollar might generally depreciate, as appetite for riskier currencies might improve amid prospects of a trade deal between the US and China as well as positive developments on the US-North Korea discussions,” a market analyst said in an e-mail on Sunday.
Mr. Trump met with North Korean leader Kim Jong-un in Hanoi, Vietnam on Thursday for a second round of talks on the denuclearization of the Korean peninsula. However, the meeting ended earlier than expected as North Korea demanded the removal of sanctions, which the US denied.
In addition to the geopolitical developments abroad as well as the mixed US economic reports, the market analyst said the dollar may also weaken due to views of softer domestic inflation and bets of a rebound in local industrial production.
Towards the end of the week, the dollar may move sideways with an upward bias, buoyed by bets on dovish remarks from the ECB during its policy meeting this week.
“[M]ajority of economic reports from the currency bloc in recent months have supported views of slowing growth. The observed slowdown in the Eurozone might convince policy makers at the ECB to adopt a more cautious stance on monetary policy and perhaps hint of a delay in the central bank’s tightening plan,” the analyst added.
For this week, the analyst expects the peso to move between P51.30 and P52.10 versus the dollar, while the trader gave a P51.55-P52.10 range. — Karl Angelo N. Vidal

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