Peso may trade sideways before key PHL, US data

THE PESO is expected to trade sideways against the dollar this week as players await the release of key economic reports, including Philippine inflation and US labor data.

On Friday, the local unit closed at P58.841 per dollar, declining by 5.1 centavos from its P58.79 finish on Dec. 29, data from the Bankers Association of the Philippines showed.

Week on week, the peso fell by 13.1 centavos from its P58.71 close on Dec. 26.

Philippine financial markets were closed on Dec. 30, Dec. 31, and Jan. 1 for Rizal Day and the New Year holidays.

On Friday, the local unit opened at P58.85 per dollar, weaker than its Dec. 29 close. Its intraday best was at P58.80, while its worst showing was at P58.90 versus the greenback.

The peso was range-bound on Friday amid a lack of leads, a trader said in a text message.

The local unit weakened as the government is now operating under a reenacted budget as the Palace continues to review the 2026 national spending plan, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Executive Secretary Ralph G. Recto said President Ferdinand R. Marcos, Jr. and his team are reviewing the 2026 National Budget. Mr. Marcos is expected to sign the spending plan on Jan. 5.

The local unit was also dragged by a generally stronger dollar on Friday amid dovish US Federal Reserve expectations on concerns over its independence as Chair Jerome H. Powell is set to end his term by midyear, Mr. Ricafort added.

The US dollar kicked off 2026 on a stronger note on Friday after struggling against most currencies last year, as traders awaited a flurry of US economic data, including several reports on the labor market, to gauge the path of interest rates, Reuters reported.

Economic data due this week include a host of reports on the labor market, culminating in the government payrolls report on Friday, which should provide insight as to where the Fed’s policy rate might move.

The dollar index, which measures the greenback against a basket of currencies, rose 0.12% to 98.37, with the euro down 0.11% at $1.1732.

Investors will also be eyeing who US President Donald J. Trump chooses to be the next Fed chair as the term of Mr. Powell ends in May.

Mr. Trump flagged that he would make his Fed chair pick this month, and many market participants expect Mr. Trump’s pick to be a proponent of more rate cuts, as the president has repeatedly criticized Mr. Powell and the Fed for not reducing borrowing costs at a faster pace and a larger magnitude.

Traders are fully pricing in two cuts this year compared to one projected by a currently divided Fed board.

For this week, the trader said the peso could continue to trade sideways against the dollar if the data releases due out this week are broadly within expectations.

In its month-ahead forecast, the Bangko Sentral ng Pilipinas (BSP) said headline inflation was likely within the 1.2%-2% range in December, slowing from the 2.9% clip seen a year ago.

At 2% or the upper end of the forecast, inflation may have picked up from 1.5% in November and would be the fastest clip in 10 months or since the 2.1% clip in February. It would likewise mark the first time in 10 months that inflation returned within the BSP’s 2%-4% target.

At the bottom end of the forecast, inflation likely eased to its slowest pace in five months or since the 0.9% in July.

The Philippine Statistics Authority is set to release the December inflation data on Jan. 6 (Tuesday).

Meanwhile, Mr. Ricafort sees the peso ranging from P58.65 to P59.05 per dollar this week. — A.M.C. Sy with Reuters