THE PESO is expected to appreciate this week, to be supported by local data releases, including inflation and trade balance.

The local unit closed at P49.55 versus the dollar on Friday, appreciating by 18 centavos from its P49.73 finish on Thursday, data from the Bankers Association of the Philippines showed.

The peso also strengthened by 37 centavos from its P49.92 close on June 26.

The market favored the peso over the dollar amid a continued surge in infections in the US, said Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc.

“The dollar weakness comes from investors still weighing signs of increasing COVID-19 (coronavirus disease 2019) infections in the [world’s] biggest economy, potentially hurting quick recovery hopes,” Mr. Asuncion said in a text message.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso was supported by prospects of a vaccine for the virus and the improvements in US jobs data.

“The peso exchange rate closed the strongest in more than three years or since June 14, 2017’s close of P49.505, after stronger-than-expected US jobs data and positive developments on possible vaccine versus COVID-19 led to improved global market risk appetite,” he said in a text message.

Data from the US Labor department showed nonfarm payrolls increased by 4.8 million jobs in June, Reuters reported. This is a record high since the government started keeping records in 1939, on the back of the reopening of more restaurants and bars as restrictions have been eased.

Analysts said the peso will keep strengthening versus the greenback this week on local data.

“The peso is expected to continue its strength with economic data releases (June inflation, exports and imports) possibly providing downward pressures),” Mr. Asuncion said.

A BusinessWorld poll of 16 economists yielded a median estimate of 2.2% for June headline inflation, within the 1.9% to 2.7% forecast range of the Bangko Sentral ng Pilipinas’ Department of Economic Research and the 2-4% target this year. If realized, the estimate would be quicker than the 2.1% pace in May but still slower than the 2.7% seen in June 2019.

Analysts said increases in oil and rice prices were the upside pressures to inflation.

The Philippine Statistics Authority will report June inflation and May international merchandise trade data on July 7 and 10, respectively.

Aside from these, the market will also watch development related to COVID-19, said Mr. Ricafort.

“Markets would also take cues on any further progress on possible vaccines versus COVID-19,” he said.

For this week, Mr. Asuncion said the peso could move around the P49.60 to P50.00 levels while Mr. Ricafort gave a forecast range of P50.30 to P50.80 per dollar. — L.W.T. Noble with Reuters