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Peso seen range-bound ahead of inflation data

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THE PESO is seen to move sideways against the dollar this week as investors price in geopolitical developments abroad and await the release of local inflation data.

The local unit ended the month at P53.475 against the greenback as risk appetite was subdued following remarks by US President Donald J. Trump on the trade war with China.

Week on week, the peso slipped a tad from its P53.465-per-dollar finish on Aug. 25.

A foreign exchange trader said the peso will move “within the usual range” versus the dollar as market players “try to wait for the developments in the trade negotiations between the US and Canada.”

Mr. Trump threatened Canada anew after the two countries failed to reach a deal before the self-imposed Friday deadline, saying there is “no political necessity” to keep Ottawa in the new North American Free Trade Agreement deal.

“If we don’t make a fair deal for the US after decades of abuse, Canada will be out,” Mr. Trump said on Twitter.

“We’ll probably try to wait for developments in the trade negotiations between the US and Canada as well as what’s going to happen between US and China,” the trader said in a phone interview.

Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, said the greenback might appreciate on Monday as “generally negative developments in the geopolitical sphere” might improve the dollar’s safe-haven appeal.

“Trade tensions between the US and its two trading partners — China and EU (European Union) — have hit the news last week,” Mr. Dumalagan said in an e-mail on Sunday.

Mr. Trump said in a Bloomberg interview he declined the European Union’s offer to eliminate tariffs on cars if it did the same, saying it was “not good enough” as “consumer habits are to buy their cars, not to buy our cars.”

Meanwhile, Mr. Trump has told his aides he is ready to slap additional tariffs on $200 billion worth of Chinese imports as soon as a public-comment period concludes on Sept. 6, Bloomberg said in a report.

From Tuesday until Wednesday, Mr. Dumalagan said the dollar could move sideways as “expectations of elevated Philippine inflation may initially weigh down on market sentiment,” making the safe-haven dollar attractive versus the riskier local currency.

Inflation likely accelerated to a fresh multiyear high in August due to higher food costs, according to a BusinessWorld poll, yielding a median estimate of 5.9%.

“The market’s direction, however, may change as focus shifts towards the [Bangko Sentral ng Pilipinas]’s monetary policy, which could turn more hawkish in the coming months in an effort to curb the rapid increase in domestic prices,” Mr. Dumalagan added.

Towards the end of the week, the market economist said, the greenback might appreciate again as likely firm labor reports could support another rate from the Federal Reserve.

US nonfarm payrolls are expected to remain above 150,000, the level considered as strong by the Federal Reserve. The unemployment rate, on the other hand, is seen to decline further to 3.8%.

For this week, Mr. Dumalagan sees the peso moving between P53.25 and P53.75 versus the dollar, while the trader gave a P53.30-P53.55 range. — Karl Angelo N. Vidal





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