THE PESO strengthened on Monday on expectations of slower inflation last month and following tepid manufacturing data from the United States.

The local unit closed at P48.405 versus the dollar on Monday, climbing 7.5 centavos from its P48.48 finish on Friday.

The peso opened Monday’s session at P48.46 against the greenback, which was also its weakest showing for the day. On the other hand, it reached an intraday high of P48.395 per dollar.

Dollars traded sank to $499.3 million on Monday from the $814.9 million logged on Friday.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a text message that the peso inched up as September inflation is seen to have remained “benign.”

A BusinessWorld poll of 16 economists held last week yielded a median headline inflation estimate of 2.3% for September, closer to the higher end of the 1.8% to 2.6% forecast range given by the Bangko Sentral ng Pilipinas and within its 2-4% target for the year.

If realized, the median estimate will be the second consecutive month of slower inflation following the 2.4% pace in August.

The Philippine Statistics Authority will report September inflation data on Oct. 6.

Meanwhile, a trader said the peso strengthened against the dollar after the US manufacturing industry slowed last month.

US manufacturing activity unexpectedly slowed in September as new orders retreated from a more than 16-1/2-year high, in line with expectations of a moderation in economic growth after a fiscal stimulus boost over the summer, Reuters reported.

The Institute for Supply Management (ISM) said on Thursday its index of national factory activity fell to a reading of 55.4 last month from 56 in August, which was the highest level since November 2018. Despite last month’s dip in the index, September marked the fourth straight month of growth.

A reading above 50 indicates expansion in manufacturing, which accounts for 11.3% of the US economy.

For today, Mr. Ricafort expects the peso to range from P48.35 to P48.45 versus the dollar while the trader sees it moving from P48.30 to P48.50.

Meanwhile, the dollar index slipped slightly on Monday but was little changed from Friday’s close as financial markets waited for news about US President Donald Trump’s health and developments in fiscal aid talks in Washington, Reuters reported.

Mr. Trump said on Friday that he had tested positive for COVID-19, triggering investor flight to safer assets and a stock market sell-off.

But early in the Asian session, Mr. Trump made a surprise appearance in a motorcade outside the hospital where he is being treated, which helped improve risk appetite.

The dollar slipped slightly against a basket of currencies, but its index held close to recent ranges, down less than 0.1% on the day at 93.785 at 0650 GMT.

Dollar-yen rose 0.3% to 105.615 at 0659 GMT, recovering from its sharpest fall in more than a month on Friday.

Riskier currencies strengthened overnight but these gains abated by the time European markets opened. — KKTJ with Reuters