THE PESO is seen to consolidate against the dollar this week due to likely hawkish speeches from some United States central bank officials and following the decision of the local monetary authority to raise interest rates.
The local unit strengthened against the greenback on Friday, ending the session at P53.28 against the dollar from the P53.46-per-dollar finish a day ago amid continued market concerns over the trade spat between the US and China.
Week on week, the peso was almost flat from its P53.27-per-dollar finish on June 14.
Last week, a foreign currency trader said the peso will consolidate in the coming days as it is expected to track the movement of the dollar.
“The peso will take its cue from how the dollar will move next week,” the trader said in a phone interview.
Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, said the greenback is expect to move sideways with an upward bias this week amid likely upbeat US data and possible hawkish remarks from some US central bank officials.
On Monday, he said the dollar “may possibly” dip following the weaker-than-expected US reports on services and manufacturing.
“[Following its decline], the dollar is expected to show some upward bias in the remaining days of the week due to potentially upbeat US data on housing and durable goods orders as well as likely mixed-to-hawkish speeches from five Federal Reserve officials,” he said in an e-mail on Saturday.
While St. Louis Fed President James B. Bullard is expected to maintain his “dovish” view on future rate hikes, Mr. Dumalagan said other Fed officials might generally affirm the US central bank’s recent guidance of four US rate hikes this year.
Mr. Dumalagan also noted that lingering concerns over the trade tensions between the world’s two largest economies may also support the greenback by keeping safe-haven demand strong.
“The impact of hawkish signals on the dollar might be reinforced by sustained demand for safe-haven currencies amid escalating US-China trade conflict,” he said.
“For now, I guess we will consolidate,” the trader noted. “Let’s see if there’s a chance for dollar-peso to [strengthen] to get that correction coming from the hike done by the BSP (Bangko Sentral ng Pilipinas).”
Last Wednesday, the BSP raised its interest rates by 25 basis points during their fourth review this year amid continued concerns over inflation. Rates now stand at a 3-4% range.
“At least it should give a little bit of reprieve from the weakness that we’ve been seeing,” the trader added.
For this week, Mr. Dumalagan expects the peso to trade between P53 and P53.50, while the trader sees the local currency moving within a P53.20-P53.50 range on Monday. — Karl Angelo N. Vidal

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